Measure Sponsored by Assembly Members Freiman, Armato, Pintor Marin, Mazzeo, Houghtaling, & Speaker Coughlin
To ensure the State’s repayment of the New Jersey COVID-19 Emergency Bond Act secured at the height of the pandemic last year to help mitigate the impact of the public health crisis, legislation sponsored to establish the “New Jersey Debt Defeasance and Prevention Fund” for the purposes of retiring and setting aside full payments of State debt such as bonds.
The fund includes coverage of 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.
The bill (A-13) requires a $3.7 billion credit from the General Fund to the “New Jersey Debt Defeasance and Prevention Fund,” which is to be appropriated as follows: $2.5 billion for the purpose of retiring and defeasing State debt; and $1.2 billion for the purpose of funding certain capital construction projects.
The sponsors, Assembly Democrats Roy Freiman (D-Somerset, Mercer, Middlesex), John Armato (D-Atlantic), Eliana Pintor Marin (D-Essex), Vince Mazzeo 9D-Atlantic) Eric Houghtaling (D-Monmouth) and Craig Coughlin (D-Middlesex) issued the following statement on the bill:
“While it is important to fully fund vital state programs, it is equally important to make sure we are focused on paying back state debt that has accumulated over the last few decades.
“This bill will help us to take advantage of our state’s improved fiscal outlook and ensure there is enough cash on hand to meet all payments of principal and interest on any outstanding bond when they come due. It helps lower risk and protects us from incurring any further debt.
“The New Jersey Debt Defeasance and Prevention Fund will be a critical piece in our long-term strategy to lower the State’s debt and could be considered a tool the State uses for the foreseeable future.”
The New Jersey COVID-19 Emergency Bond Act, which was enacted in July 2020, authorized the State to borrow up to $9.9 billion to offset anticipated declines in State revenue resulting from the COVID-19 public health emergency. The State ultimately borrowed approximately $3.7 billion for this purpose.