Superfluous Borrowing Gimmick Sparked Credit Rating Chop that will Cost Taxpayers More Money
Senator Jim Holzapfel and Assemblymen Greg McGuckin and John Catalano today cautioned that New Jersey is beginning to feel the impact of irresponsible, misleading and reckless financial decisions by Governor Murphy and the Trenton Democrats.
New Jersey is feeling the impact of irresponsible, misleading and reckless financial decisions by Governor Murphy and the Trenton Democrats, Senator Holzapfel and Assemblymen McGuckin and Catalano today cautioned. (Pixabay)
It was recently revealed that the state’s credit rating was downgraded by S&P Global Ratings, a major Wall Street rating agency. In announcing the ratings slap, S&P cited significant “structural deficits” and dropped New Jersey’s rating for general obligation bonds to BBB+.
“We have been sounding the alarm since the Administration first floated the idea of borrowing to fill what they claimed to be a $10 billion shortfall created by the pandemic,” said Senator Holzapfel. “Along with our Republican colleagues, we questioned the size of the revenue hole, which turned out to be less than half of Democrats’ expectations, and warned of the severe impact borrowing to pay our bills would have on state finances and the economy.
“It was a horrible idea from the start, and as a result of the foolhardy gimmick and the rating downgrade, it will cost more to borrow for important public projects in the future. New Jersey taxpayers will be paying for this flawed money management for decades into the future,” said Holzapfel.
In spite of Republican opposition, in the summer the Legislature approved up to $9.9 billion in emergency borrowing that avoided constitutionally required voter approval.
Murphy’s state budget enacted in September was dependent on almost $5 billion in debt.
“This is the first time S&P has ever rated New Jersey this low, and the other major rating firms have negative outlooks toward the state’s finances,” said Assemblyman McGuckin. “If the borrowed money had been used to help businesses and nonprofits reopen, or to stabilize schools, it may have been worth it. This money was used in the budget to give union employees who work for the state 4 percent raises while millions of New Jerseyans lost their jobs, and to hand out pork and Christmas presents like subsidies for a golf course in Essex County.”
The weaker credit rating can factor in higher borrowing costs when the state issues long-term bonds like Murphy will do in November.
“There is no justification for borrowing to cover debt. Taxpayers will be left holding the bag for unnecessary debt,” said Assemblyman Catalano. “The projected massive budget hole used by the Democrats to justify the borrowing was significantly exaggerated. This policy caused avoidable damage to New Jersey’s credit rating. It will cost taxpayers more in the future so the Governor can build a gratuitous multi-billion-dollar surplus this year, and next year, as he ramps up his reelection campaign, he will spend a billion more playing Santa Claus for his political friends.”
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