TRENTON – New Jersey’s long-term debt increased by more than $44 billion in fiscal 2021.
The debt was primarily due to an increase in the projected cost of health care benefits for retired public employees and about $4 billion in COVID-19 emergency bonds that turned out to be unneeded.
The long-delayed annual debt report was presented to the state’s Capital Budgeting and Planning Commission on Wednesday.
It shows that total commitments reached $248.6 billion in mid-2021. It breaks a streak of three straight years in which the total had declined, though it remains less than 2017’s record $262 billion.
Almost $27,000 per person
The grand total is $26,827 for each resident in the state, up nearly 22% from $22,014 per person in mid-2020.
Debt obligations totaled $48.2 billion in mid-2021, up from $44.4 billion in mid-2020. Pension debt exceeded $95 billion, up $4.4 billion year-over-year. Liabilities for future health care benefits for public sector retirees were $102 billion, up from $36 billion in one year.
In addition to the COVID bonds, the state took on additional debt of $2.1 billion for transportation projects, $350 million for school construction, $325 million for projects at county colleges and vo-tech schools, as well as for K-12 school security and $50 million for library construction, as well as other minor loans.
“You weren’t honest”
Sen. Sam Thompson, R-Middlesex, a member of the commission, said the report contradicted what Treasurer Elizabeth Maher Muoio claimed at a budget hearing about reducing the national debt.
“The truth about New Jersey’s debt revealed in the professional report stands in stark contrast to Treasurer Muoio and Governor (Phil) Murphy’s false claims that the government has reduced the national debt,” Thompson said. “They weren’t honest with people at all.”
Muoio said the debt report reflected “a point in time before the state allocated nearly $9 billion for debt reduction and debt avoidance.”
The data represents how the books looked on June 30, 2021.
“improved dramatically since then”
“Our fiscal position has improved dramatically since then, with a record surplus, two consecutive full pension payments and significant debt reduction, all contributing to two recent credit improvements,” Muoio said.
Between November and January, the state reduced $2.25 billion in past debts — essentially by setting aside the money now needed to pay it off when it falls due. That wipes them off the balance sheet and will be reflected in next year’s debt report.
“As a result of steps taken over the past year, the government’s current debt level is now (end of fiscal 2022) lower than at any point since fiscal 2015,” she said.
In fiscal 2015, the debt totaled $43.2 billion, according to the debt report.
In the fiscal year that began in July 2021, the state made its full contribution to public workers’ pension funds for the first time in a quarter of a century. It will do so again this financial year. But the calculation in the report assumed the state would contribute 78% of what was due for several decades.
The state says the deficit owed on future health care benefits for retired public employees has increased by $36 billion due to a few factors: The index used to discount liabilities was cut to 2.1% from 3.5% , and there were higher-than-expected Medicare Advantage claims as COVID restrictions eased.
Thompson said the new state budget doesn’t have $5 billion for debt reduction because so much of that will be spent on projects — avoiding debt, not reducing it.
“This funding is for new spending, including pork projects, selected by a backroom star chamber with no transparency or oversight,” Thompson said. “Most of these projects would likely not qualify for financing under previous credit approvals, which continue to be fully utilized. To be honest, the treasurer has lost all credibility.”
Michael Symons is the Statehouse bureau chief for New Jersey 101.5. You can reach him at [email protected]
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