NJ Fiscal Folly

Wednesday, May 10, 2006

NJ State Debt Disclosure

One of the many reasons NJ financial management is so poor is because NJ financial disclosure is so poor. Like the managers of a badly run company, NJ politicians and bureaucrats like to avoid any form of reporting that might be used to hold them accountable.

There was a story in yesterday's news that NJ's total state debt has now increased to $33 billion, up 11.5% from last year. However, we get this information from Moody's Investors Service, not the NJ State Treasurer. In all likelihood, the Treasury Department provided the data to Moody's, but not to any NJ taxpayers.

The Public Finance Division of the Treasury Department has a web site which contains two reports related to state debt. However, the reports are incomplete and way out of date. There are no schedules in the Corzine budget proposal with more current information.

I have two recommendations.

First, the State Treasurer should be required to maintain current information on total NJ state debt on the Public Finance web site. The format of the schedule labeled "State of New Jersey Debt Analysis" is particularly useful. The web site should also include current bond ratings for benchmark state bonds from all major ratings agencies. Any links to rating agency reports would be valuable too.

Second, there should be a requirement that all budget proposals and approved budgets include detailed information and summaries of total NJ state debt (including debt service requirements for the next 3-5 years). The best figures would be outstanding debt as of the December 31 immediately preceding the next budget year (eg, 12/31/05 data for the FY 2006-07 budget year). This kind of information is standard in any large private sector budget.

Current information on total NJ state debt is easily available. There's no reason that Moody's should receive this data but not NJ taxpayers.

2 Comments:

At 8:20 PM, Blogger Enlighten said...

We've digging around for data on the state’s debt also. We did find that state debt was about $5 billion when Florio left office and about $17 billion when McGreevey took over as Governor. As you noted the state’s debt is now $33 billion, not counting Corzine’s plan to borrow to replenish the transportation trust fund.

It would be nice to know the purpose of the debt. We know Whitman borrowed $2.8 billion for the state employee’s pension plans and another billion for purchasing open space land. Then there was $8.6 billion for the Schools Construction Corp From there it becomes a bit difficult to pin down the numbers

 
At 9:30 AM, Blogger PN said...

The old Debt Analysis schedule showed which agencies were borrowing, which gave some idea of the intended purpose. However, General Obligation bonds cover a multitude of sins.

Two things I could have added to my post.

First, it would be valuable to see time series data showing the growth in NJ state debt over time, including the relevant components.

Second, it would be nice to see projections of future borrowings, such as transportation and SCC fundings.

Of course, state debt does not include unfunded pension liabilities or post-retirement health care liabilities. These two items currently total at least $40 billion.

 

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