CORZINE USES BUDGET SURPLUS TO PAY DOWN $650 MILLION IN STATE DEBT

TRENTON - Governor Jon S. Corzine today took another step forward in the implementing of his historic $650 million debt reduction effort that will realize $135 million of savings in debt service payments in fiscal 2009 and at least $130 million in each of the next four years. 

Governor Corzine is one of three statutorily empowered “issuing officials” for General Obligation (GO) debt, and today joined the two others – the State Treasurer and the Comptroller of the Treasury – in authorizing defeasance of outstanding bonds from 14 series of GO bonds. This authorization follows similar defeasance votes last week on outstanding bonds by the Boards of the Economic Development Authority and the Sports and Exposition Authority and the State Building Authority today.

“I’m proud that today for the first time ever we’re using budget surpluses to pay down state debt,” Governor Corzine said. “We’ve reached a turning point in New Jersey finances and people are starting to notice. In fact, just last week Wall Street rating agencies publicly recognized our progress in moving New Jersey back towards fiscal responsibility.” 

Along with putting aside money to begin paying down the State’s debt, Governor Corzine’s FY ‘09 budget also contained a $2.9 billion reduction in spending; reduced the size of government by 3,000 workers through early retirement and attrition; cut the operating budgets of every state department by an average of five percent and eliminated altogether the Department of Personnel and the Commerce Commission.

Last week, all three Wall Street ratings agencies issued ratings reports highlighting the State’s progress toward restoring fiscal stability, restoring structural balance to the budget and easing the debt burden on State finances.

With today’s approval, all the required authorizations will be in place to move forward with executing the debt reduction plan. The State Treasurer will finalize decisions on specific series, and the amount of bonds to be paid from each series within the next few weeks, so that the State can implement the debt reduction plan that achieves the debt service savings goals for the State budget.

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