Bill Text: NJ S3435 | 2022-2023 | Regular Session | Introduced
Bill Title: Restricts authorization of new debt by State Treasurer.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2023-01-10 - Introduced in the Senate, Referred to Senate Budget and Appropriations Committee [S3435 Detail]
Download: New_Jersey-2022-S3435-Introduced.html
Sponsored by:
Senator DECLAN J. O'SCANLON, JR.
District 13 (Monmouth)
SYNOPSIS
Restricts authorization of new debt by State Treasurer.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning the use of unexpended and uncommitted balances in the "New Jersey Debt Defeasance and Prevention Fund" to avoid issuance of additional State debt, and amending P.L.2021, c.125.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 1 of P.L.2021, c.125 (C.52:9H-2.2) is amended to read as follows:
1. a. There is created within the General Fund a restricted reserve fund to be known as the "New Jersey Debt Defeasance and Prevention Fund." The "New Jersey Debt Defeasance and Prevention Fund" shall be credited with the amount appropriated to the fund pursuant to section 2 of P.L.2021, c.125 and such funds as the Legislature may, from time to time, appropriate for the purposes of the fund as enumerated in subsection b. of this section.
b. Balances in the "New Jersey Debt Defeasance and Prevention Fund" may be appropriated by the Legislature only for the purposes of: retiring and defeasing State debt, including general obligation bonds and appropriations-backed bonds, and the costs thereof; and funding capital projects on a pay-as-you-go basis rather than issuing additional State debt, including general obligation bonds or appropriations-backed bonds.
c. The State Treasurer shall be prohibited from authorizing, or otherwise facilitating, the issuance of appropriations-backed bonds unless:
(1) there are no unexpended and uncommitted balances available in the "New Jersey Debt Defeasance and Prevention Fund"; or
(2) the present value of debt service per $1,000 of face value of appropriations-backed bonds being issued is less than the present value of debt service per $1,000 of face value of appropriations-backed bonds that could be retired or defeased though the "New Jersey Debt Defeasance and Prevention Fund."
d. In any fiscal year in which there is an unexpended and uncommitted balance in the "New Jersey Debt Defeasance and Prevention Fund," the State Treasurer shall immediately notify the Joint Budget Oversight Committee, or its successor, whenever the State Treasurer is facilitating the issuance of appropriations-backed bonds, and shall certify that State bonds with higher amounts of debt service that could otherwise be retired or defeased do not remain outstanding, or that the issuance of any new State debt is in compliance with this section.
(cf: P.L.2021, c.125, s.1)
2. This act shall take effect immediately.
STATEMENT
This bill prohibits the State Treasurer from authorizing new State debt through appropriations-backed bonds unless: (1) there is no available balance in the "New Jersey Debt Defeasance and Prevention Fund"; or (2) the present value of debt service per $1,000 of face value of appropriations-backed bonds being issued is less than the present value of debt service per $1,000 of face value of appropriations-backed bonds that could be retired or defeased though the "New Jersey Debt Defeasance and Prevention Fund."
When the fund has an unexpended and uncommitted balance, the bill requires the State Treasurer to immediately notify the Joint Budget Oversight Committee, or its successor, whenever the State Treasurer is facilitating the issuance of new appropriations-backed bonds and would be required to certify that State bonds with higher amounts of debt service that could otherwise be retired or defeased do not remain outstanding, or that the issuance of new State debt is in compliance with applicable law.
The bill is intended to address instances where the State Treasurer has been authorizing new State debt with payment schedules beginning a decade into the future, declining to pay back debt with high rates of interest despite availability of funds, and choosing to defease debt with lower interest rates. By regulating the issuance of new State debt in accordance with the provisions of this bill, the State can ensure responsible management of its debt obligations.
