With New Jersey teetering on the brink of insolvency and already unable to pay its bills without shorting public pension funds, it is hard to believe that anyone could advocate that the State borrow yet another $400 million. Yet this is precisely what is happening, so allow me to present, in brief, the case for voting against the proposed bond issue.
First, the State of New Jersey has already issued roughly $40 billion in state-authorized debt (most of it, by the way, without voter approval). But $40 billion is not what the people of our state will have to pay; it is just the “principal” sum. Factor in the interest costs over the life of the bonds, and the real payback figure is more like $70 billion.
By the way, the same is true for the proposed bond issue: it may approve $400 million in new debt, but the payback will be around $700 million. Funny, how the sponsors choose not to share this important information with voters in the “explanation” on the ballot!
Second, the state debt, huge as it is, makes up only about one-third of the state’s long-term financial obligations. The unfunded public pension obligation is estimated by experts to be in the neighborhood of $60 billion, while the unfunded cost of health insurance for retired public employees is also pegged at about $60 billion.
So, overall, the State of New Jersey is in the hole for something on the order of $190 billion. To put this problem in context, consider that New Jersey’s annual state budget is about $30 billion. This means that the taxpayers are on the hook for more than six years’ worth of state revenue just to pay the state debt, public pensions, and retiree health benefits. Despite all this, some folks feel that we should go even further in debt. I disagree and urge voters to reject the proposed bond issue on November 3.
I have long supported open-space bond issues as sound, long-term public policy to ensure that future generations of New Jersey residents get to enjoy the same unspoiled areas of our state that we do. However, recent open-space proposals have shifted away from their original focus of preserving undeveloped land to political purposes. Moreover, New Jersey is, as a succession of governors have now warned us, functionally broke. It does little good to promise future generations more “open space” at the cost of breaking their financial backs with overwhelming taxes just to pay for today’s uncontrolled borrowing and spending.
“Hard cases,” it is said, “make bad law.” It is hard, indeed, to oppose funding for open space preservation, which ranks only slightly below motherhood and apple pie in terms of public policy priorities. Nonetheless, voters passing this bond issue would certainly make “bad law,” because they would be spending money none of us has and which our children and children’s children will be forced to pay back. This is not the kind of legacy I have in mind for my family, nor should it be for anybody else.
Vote “no” on the proposed bond issue on November 3.
Richard Merkt is an Assemblyman from Morris County. He sought the Republican nomination for Governor in 2009.