Senate President Steve Sweeney (D-West Deptford) said he regrets the state’s move to borrow $4.2 billion to plug virus-fueled revenue holes that turned out to be much smaller than anticipated.
“I think we moved too quick to go to the market,” he said. “But again, we were facing something different than what we expected.”
The state in November approved $4.2 billion in emergency borrowing that skirted voter approval over objections from Republican members, who cautioned the borrowing could balloon New Jersey’s already hefty debt.
The bill allowing the bonding passed narrowly along party lines before facing a Republican suit that charged it was unconstitutional. That suit failed, and Democrats pressed on with borrowing, but Sweeney now says they ought not have.
“It was one of these things that we should have waited until after the first year, get a clearer picture of our revenues, but again, in the moment, time, the administration made the decision and we borrowed,” Sweeney said.
New Jersey has long had problems with debt. Its pension system, despite Murphy proposing the first full payment in 25 years last month, is the worst funded in the country, and debt obligations cost the state billions of dollars each year.
The borrowed funds add to that, though Sweeney is hoping the state can use the funds to offset other costs, but options there may be limited. The Republican suit ended with the courts saying New Jersey must use the money for expenses related to the pandemic. It couldn’t for example, use the funds to build a new stadium.
“I am very disappointed that they made the debt non-callable because we got to retire debt somehow here,” Sweeney said. “It can turn out to be good if we find more expensive debt that we could retire to equate to what we borrowed, so we’re looking at that.”
The interest rate on the bonds, at about 2%, are low.