TRENTON – Legislation sponsored by Senator Troy Singleton and Senator Nilsa Cruz-Perez that would require an annual state debt affordability analysis to be included in the State Debt Report was passed by the Senate Budget and Appropriations Committee today.
“Fiscal responsibility can’t be achieved blindly,” said Singleton (D-Burlington). “We need to have a more comprehensive and precise forecast in order to create a clearer portrait of New Jersey’s debt picture and encourage greater fiscal responsibility.”
“New Jersey is going to have to make difficult financial decisions to fix the state, and handling our debt is one of those big decisions,” said Senator Cruz-Perez (D-Camden/Gloucester). “An affordability analysis, like the one in this bill, is what we need in order to manage our debt and figure out how to move forward.”
The bill, S-1591, would require the affordability analysis to be included in the annual State Debt Report to provide executive and legislative policymakers a clear, data-driven framework for evaluating and establishing future state debt management and issuance priorities.
The affordability analysis would have to include a number of specifics such as: an estimate of revenues available for the next 10 fiscal years to pay debt service; an estimate of additional debt issuance for the next 10 fiscal years for the state’s existing borrowing programs; and a schedule of the annual debt service requirements, including principal and interest allocation, on outstanding state debt.
The report would also have to include the calculations and listing of pertinent debt ratios, including debt service to state revenues available to pay debt service, debt to state per capita personal income, and debt per capita for the state’s net tax-supported debt; a comparison of the state’s debt ratios with those for the 10 most populous states; an overview of the state’s general obligation credit rating and a review of the criteria used by municipal securities rating services in rating governmental obligations.
The bill was released from committee by a vote of 12-0, and next heads to the full Senate for further consideration.