Says Murphy’s Borrowing Plan Repeats the Financial Malpractice that Buried New Jersey in Debt
Senator Declan O’Scanlon questioned why the Murphy administration plans on issuing $750 million in high-interest debt with interest-only payments for a decade when the State has billions sitting unallocated in its debt defeasance and prevention fund.
Sen. Declan O’Scanlon questioned why the Murphy administration plans on issuing $750 million in high-interest debt with interest-only payments for a decade when the State has billions sitting unallocated in its debt defeasance and prevention fund. (©iStock)
“The debt defeasance and prevention fund was created to offset reckless and expensive borrowing of the exact type that the Murphy administration will soon issue for the Transportation Trust Fund,” said O’Scanlon (R-Monmouth), a member of the Senate Budget & Appropriations Committee. “Instead of using funds already on hand to pay for our upcoming transportation needs, the governor wants to commit to 30 years of debt while kicking the can on principal payments ten years down the road. This proposed borrowing is utterly irresponsible and repeats the financial malpractice that has buried New Jersey in debt.”
The Murphy administration announced it will issue $750 million in debt this month to fund the Transportation Trust Fund (TTF). The 30-year debt will be issued at rates of 5% to 5.5%, with interest-only payments until 2032.
In total, debt service on the TTF debt will include $1.527 billion in repayments, including interest, that will cost New Jersey taxpayers more than double the $750 million that the Murphy administration plans on borrowing.
O’Scanlon said that high-cost debt makes no sense when the State has $3 billion in unallocated funds sitting in the State’s debt defeasance and avoidance fund.
“Since TTF debt is repaid through gas taxes collected at the pump, Governor Murphy is setting the stage for another big gas tax increase at some point in the near future,” added O’Scanlon. “To commit to such an irresponsible borrowing scheme when the State has money sitting in the bank to prevent new debt shows just how little the governor cares about helping families that are struggling with high taxes, inflation, and gas prices.”