New Jersey taxpayers this year are on the hook for a record payment — nearly $2.8 billion — just to cover the cost of borrowing money.
That’s 3½ times as much as it cost 10 years ago. Paying off borrowed money will account for around 8 percent of the total budget Governor Corzine is expected to introduce Thursday, eating up money that could go to cutting property taxes, defraying rising school costs or paying aid to hospitals that treat the poor.
The $2.8 billion due in the coming fiscal year is more than what the state will spend on the new 20 percent property tax credit for most homeowners passed by the Legislature earlier this month. It could just cover the cost of salaries and operating expenses for most of state government.
In his second state budget address, Corzine is expected to unveil on Thursday a plan that is likely to top $32 billion and will feature the new $2.2 billion property tax credit program. But without major tax increases or wholesale cuts to necessary programs, Corzine administration officials say the rising debt has hampered their ability to spend on other priorities.
“This is 7 or 8 percent of our budget. What’s frustrating about it, other than paying it down there’s not much we can do,” said state Treasurer Bradley Abelow, who added that the state has run out of its refinancing options. “These are not discretionary in any way, shape or form.”
Since 2001, the state has borrowed $8.5 billion to cover the cost of state government while tax revenues slowed down or fell off altogether.
Five years ago, total debt was $15.2 billion, or 71 percent of the total yearly budget. Now total debt is $29.7 billion — or 96 percent of the total annual spending.
As it stands now, New Jersey owes creditors a total of $29.7 billion. Add in all the independent agencies like the New Jersey Turnpike Authority and the Sports and Exposition Authority and that number balloons to $37.4 billion.
The state’s portion means that each of New Jersey’s 8.5 million residents owes about $3,500. That total debt — also a record for New Jersey — puts the state third in the nation behind California and New York, according to a recent legislative study.
The pressure to pay down the debt and cut the yearly expense is at the root of Corzine’s push to consider selling off state assets like the New Jersey Turnpike. A financial consultant brought in by the administration has told the state to view naming rights to bridges and other government properties and development rights at train stations as possible sources for cash.