Report confirms rise in New Jersey debt during pandemic’s first year
The state Treasury's annual debt report confirms figures in a state audit released last month that showed obligations surged in fiscal year 2021. (Getty Images)
New Jersey took on more debt during the first year of the pandemic, ballooning its obligations to $248.6 billion, according to a debt report released by the state Treasury Wednesday.
The debt growth was driven mostly by a $40.5 billion increase in the state’s non-bonded obligations, which rose to $200.4 billion in the year starting June 30, 2020.
The overwhelming share of the increase in non-bonded debt came from a $36.1 billion increase in the state’s retirement benefits liabilities. Those include health and life insurance, along with other types of non-pension compensation owed to active, inactive, and retired public workers.
In total, the state’s liabilities for these benefits rested at $101.6 billion — just over half of all non-bonded debt — at the end of fiscal year 2021.
Treasury officials pointed to the data’s age when arguing the state’s fiscal health has improved.
“This report represents a point in time prior to the state committing nearly $9 billion to bonded debt reduction and avoidance,” Treasury spokesperson Danielle Currie said. “Our fiscal position has improved dramatically since then with a record surplus, two consecutive full pension payments, and significant debt reduction, all of which have contributed to two recent credit upgrades.”
The results of the Treasury’s debt report closely mirror figures in an annual financial report the agency released last month. Republicans charged the fiscal year 2021 debt figures are a sign the administration had deceived lawmakers, a charge they repeated Wednesday.
“The truth about New Jersey’s debt that’s revealed in the professional report stands in stark contrast to the false claims by Treasurer Muoio and Governor Murphy that the administration has reduced state debt,” said Sen. Sam Thompson (R-Middlesex), a member of the Senate Budget Committee. “They haven’t been honest with people at all.”
Currie added the state’s bonded debt is lower now than it has been since fiscal year 2015, when New Jersey’s bonded obligations were just over $42.7 billion. She did not provide a figure for the state’s current bonded debt.
The report says New Jersey’s pension debt rose by $4.4 billion to a total of $95 billion in fiscal year 2021. That increase came before the state made its first full annual pension payment in 25 years in fiscal year 2022. The budget Gov. Phil Murphy signed into law last month also includes a full pension payment.
The state’s bonded debt rose by $3.8 billion in fiscal year 2021, but that increase was fueled almost entirely by $3.7 billion in borrowing made to fill a pandemic-borne budget hole that never materialized.
That money was instead used for the state’s initial deposit into a fund intended to pay down existing, higher-interest debt and forgo future borrowing by directly funding capital projects.
Lawmakers deposited another $5.2 billion into the fund with this year’s budget, but $2.9 billion was immediately set aside for specific capital costs, leaving the fund with a balance of about $3 billion on July 1, the start of fiscal year 2023.
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