New Jersey Republicans Question Gov. Murphy's Borrowing Plans

By Christian Wade | The Center Square contributor, The Center Square New Jersey

December 15, 2022

(The Center Square) – New Jersey Republicans are criticizing the Murphy administration’s plan to borrow more money for transportation, while sitting on billions of dollars in a special state debt prevention fund.

Last week, state transportation officials issued $750 million in bonds for the Transportation Trust Fund, which pays for statewide roadway, bridge and railway improvements.

But Sen. Declan O’Scanlon, R-Monmouth, a member of the Senate Budget and Appropriations Committee, is criticizing the bonding, pointing out the "debt defeasance and prevention fund" was created specifically "to offset reckless and expensive borrowing" by the executive branch. He said the new bonds would cost New Jersey an estimated $1.5 billion over the next three decades and could force an increase in the state's gas tax, which is tied to the trust fund.

"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," he said. "This proposed borrowing is utterly irresponsible and repeats the financial malpractice that has buried New Jersey in debt."

O'Scanlon said with federal interest rates at the highest level in 15 years, the state should curb its borrowing and tap money from the fund to avoid taking on more debt.

To be sure, Gov. Phil Murphy battled with the state's Republicans over borrowing plans during the COVID-19 pandemic.

In 2020, Republicans sued over his plans to borrow billions of dollars without voter approval to offset revenue losses from the pandemic. At the time, Republicans argued the borrowing would force the state to raise taxes. But the state Supreme Court ultimately sided with the Murphy administration, clearing the borrowing.

"During the pandemic, the state borrowed about $4 billion without voter approval to cover the cost of anticipated revenue shortfalls," according to the Murphy administration.

Lawmakers created the $3 billion debt fund to save the state money on debt service, by paying down borrowing ahead of schedule, and reducing interest payments and to prevent borrowing by directly funding capital projects.

Money from the debt prevention fund was used to pay down roughly $2 billion in bonded debt last year, which officials say saved taxpayers an estimated $600 million in debt service.

The focus of the work of The Center Square New Jersey is state and local-level government and economic reporting that approaches stories with a taxpayer sensibility.