We still don't have the latest numbers on the amount of debt the state government racked up last year.
But early figures show progress is being made in key areas.
It's a welcome sign for one of the most indebted states in the nation.
But will it last?
Budget and finance writer John Reitmeyer is here now to share the details.
Well, John, debt has been among top concern for state lawmakers for years.
Tell us the good news, though, that we're getting out of the budget hearings this week.
Yeah, that's right, Briana.
And it was around this time last year that we were reporting on a big spike in debt both bonded debt and non what's known as non-bonded debt, which is namely what New Jersey owes retired workers in terms of pension benefits.
and health care.
And after that big spike last year, we've sort of been keeping an eye on what's been going on.
The state has budgeted another full employer pension contribution and also taken measures to retire debt.
And as of the end of the last fiscal year, the latest figures that we have do show improvement on both sides of that debt ledger.
And so it's almost as if you've got a report from your doctor asking you maybe to exercise more or change your diet to improve your blood pressure.
And then you come back from a checkup and you find that your blood pressure is going down.
And so and we wouldn't be surprised to see some of this improvement.
But it is nice to see the state do some things to address to address its debt load and that start to show up in the financial documents.
So the treasurer's office, the Murphy administration, I'm sure, is pointing to this, saying, look, what we're doing is working.
What's really enabled them, though, to make these payments and to get these numbers down?
Yeah.
And we should be clear that New Jersey, despite some of this incremental progress, still has a really big level of bonded debt and a large unfunded pension liability.
And that built up over years of shorting the annual pension contributions and also racking up a lot of bonded debt instead of maybe funding things more on a pay-as-you-go basis.
But in recent budget hearings, the administration has pointed to both an effort to retire debt early, something known as defeasance, but also generally trying to issue less bonded debt than the state takes on each year.
And so that's basically kind of paying off your credit card bill at a higher rate than your state buying things on your credit card.
And so that's what's being pointed to to to help address the bonded debt.
And then on the pension side of this, it's really this commitment that's going to be three years running under the budget the governor has proposed for the fiscal year that begins July one.
Of just paying the pension bills, making what actuaries would consider to be full pension contributions.
And that comes after years of the state, including during the early years of the Murphy administration, when things were starting to ramp up.
But of the state not paying its full employer pension contributions.
And so that racked up a lot of debt on the back side of that policy.
All right.
Well, I'll echo what we've been hearing from Republicans.
Is it sustainable, though, for the state?
I mean, have they made real structural changes in the budget to make sure they can continue paying their bills and their debt in this way?
Yeah, that's a really good point to bring up.
The improvement has all occurred during a big surge in revenue that we've seen.
You know the federal government responded very robustly to the COVID-19 pandemic, and that helped in terms of generating a lot of tax revenue for New Jersey.
Now that we're maybe entering into a period where we could see economic growth slow, that will be the big test for this new, these new measures to address that.
All right.
John Reitmeyer, always helping us to make sense of these complex issues.
We appreciate it.
You're welcome.