Bill renewing debt reduction fund gets Murphy’s signature
NJ Transit will receive $814 million for capital expenditures under the bill, which injects billions into a fund intended to manage the state’s debt. (Edwin J. Torres/Governor’s Office)
Gov. Phil Murphy signed a bill Thursday injecting billions of dollars into capital budgets at the Schools Development Authority, the Department of Transportation, and NJ Transit.
The three agencies will get a combined $2.9 billion from the general fund, with the biggest tranche going to the SDA, which is responsible for building and maintaining schools mostly in urban and low-income districts.
Of the $1.9 billion set aside for the schools agency, roughly $1.5 billion is devoted to the state’s 31 SDA districts — places like Camden, Bridgeton, New Brunswick, and Garfield where court decisions make the state responsible for ensuring students receive an adequate education — while $350 million can be used for capital projects and maintenance in all other school districts in the state.
NJ Transit will receive $814 million for capital expenditures under the bill, including:
- $191 million for upgrades to Newark Penn Station.
- $250 million for the redevelopment of Camden’s Walter Rand Transportation Center.
- $176 million for upgrades to Hoboken’s bus and ferry terminals.
- $48 million for upgrades to Bloomfield Station.
- $33 million for upgrades to Brick Church Station in East Orange.
- $49 million for new platforms and other improvements to the New Brunswick Station.
- $27 million for a new platform and other remediations at Roselle Park Station.
- $50 million for the construction of a new maintenance facility in Clifton.
Of the $230 million the Department of Transportation is set to receive, $135 million will go toward the design and construction of pieces of the Lincoln Tunnel Access Project. Those include the new Wittpenn Bridge on Route 7, a new road off of Routes 1&9 meant to ease freight traffic congestion in the state’s northeast, and the rehabilitation of the Pulaski Skyway.
The Port Authority of New York and New Jersey is funding a portion of those projects.
Another $50 million is devoted to remaking the I-295 retaining wall that collapsed last March, and $45 million is being set aside to design other transportation infrastructure projects.
Both chambers of the Legislature approved the bill Wednesday in votes that fell almost entirely along party lines.
The $2.9 billion devoted to the capital expenditures come from New Jersey’s Debt Defeasance and Prevention Fund, which was established last June using $3.7 billion the state borrowed to plug an anticipated pandemic-borne budget hole that never materialized.
Money from the fund is used to avoid borrowing by directly funding capital projects, or to pay off higher-interest debt, thereby saving the state money on debt service. Treasury officials have said $2.2 billion in debt paid down from the fund last year will save New Jersey more than $600 million in interest costs over the next 10 years.
“Last year, this Assembly took a very important step because we turned the page on the state’s history of how we managed our debt,” said Assemblyman Roy Freiman (D-Somerset), the bill’s prime sponsor in the chamber. “New Jersey, unfortunately, has had for decades piling debt, and they weren’t paying attention to it. We weren’t paying attention to it.”
The bill makes a $5.2 billion deposit into the fund, but that balance is immediately reduced by the $2.9 billion appropriation to the SDA, the Department of Transportation, and NJ Transit, meaning that money is functionally out of the fund.
An additional $765 million deposited into the fund last year for capital expenditures will carry over into the new fiscal year, leaving the state with about $3 billion it can use to avoid borrowing or pay down debt.
The fund’s remaining balance cannot be spent without the approval of the Joint Budget Oversight Committee. The $2.9 billion set aside for the three agencies does not need such approval because those appropriations were delineated in a bill.
Budget language sets an identical process for approving spending from the $1.3 billion in unallocated federal aid disbursed to New Jersey under the American Rescue Plan, though the spending bill gives Murphy a $300 million pot of federal funds he can use without the joint budget panel’s approval, with some restrictions.
Those provisions left some Republicans worried about the control that the provisions give Murphy over spending.
“I’m all for paying back debt, but I’m not for giving Governor Murphy a pair of massive slush funds that will allow him to dole out taxpayer funds without oversight,” said Sen. Steve Oroho (R-Sussex), the chamber’s GOP leader. “We need more transparency in our budget process, not less like Democrats have proposed.”
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