It’s the rare occasion when a New Jersey politician is honest with the public, so kudos to Senate President Steve Sweeney for telling it straight. NorthJersey.com reports that Sweeney now regrets the 2020 issuance of $4.3 billion in bonds in expectation of COVID-related revenue shortfalls. And rightfully so.
Even though the $4.3 billion in bonds was characterized as emergency borrowing – and thus allowed by the NJ Supreme Court – it ended up facilitating a $4.9 billion payment into NJ’s broken, unreformed public pension system. That’s essentially a reprise of the disastrous 1997 pension obligation bonds and amounts to throwing billions of good money after bad. Even worse, with revenues coming in better than expected and federal money on the way, it turns out NJ did not need to borrow the money in the first place. Worse still, the bonds are structured so that they cannot be paid down before maturity and carry a very high interest rate. This means that in order to maximize the amount of money coming into the state treasury immediately, Gov. Murphy and the legislature stuck future NJ taxpayers with very costly debt – on top of NJ’s already highest-in-the-nation debt load. This is kicking the can down the road in the worst sort of way.
Gov. Murphy would rather keep NJ citizens in the dark about this. At least Senator Sweeney is being honest that the bond borrowing was a mistake.
Sweeney is also one of the few politicians who is alerting the public to the threat of a “death spiral” for NJ if it continues down its path of high taxes, an underperforming economy, outmigration of people and businesses and massive unreformed, unfunded public pension liabilities. His Path to Progress provides many common-sense steps to address NJ’s many problem areas.
Honesty is the first step to finding real solutions. At least one politician – Sweeney – is being honest.