Governor Jon S. Corzine
February 29, 2008
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GOVERNOR ANNOUNCES ADDITIONAL MEMBERS OF FINANCIAL RESTRUCTURING AND DEBT REDUCTION STEERING COMMITTEE
TRENTON - Governor Jon S. Corzine today announced new members of the Financial Restructuring and Debt Reduction Campaign Steering Committee. The most recently announced group consists of leaders in, business, finance, labor and public service. These new members will join the 53 existing members of the steering committee, along with former Congressman Bob Franks, and will assist in varying ways to advocate for the financial restructuring and debt reduction initiative, educate the public about the proposal, as well as continue to provide counsel to the Governor.
“As we continue the conversation about how best to pay down our state’s crushing $32 billion dollar debt I’m proud to have this outstanding group of individuals join me in the discussion,” Governor Corzine said. “These leaders recognize the crisis at hand and have shown admirable courage in their willingness to work towards a solution to pay down our debt and fund infrastructure improvements.”
The following new members were announced today: Jim Appleton, President, NJ CAR; Thom Jackson, General Counsel and Corporate Secretary at Edison Schools, Prudential Financial; Dave McCann, Executive Director, Service Employees International Union, New Jersey Council; Phil Murphy, former Senior Partner, Goldman Sachs Group, Inc.; Bill Neary, Mayor of East Brunswick; Tim Touhey, Executive Vice President, NJ Builders Association.
Governor Corzine has previously stated that he is open to considering thoughtful alternative solutions to solving New Jersey’s debt crisis and funding transportation infrastructure for a generation. The Governor will work with the steering committee to carefully consider any alternative solutions provided.
The Governor Financial Restructuring and Debt Reduction plan is composed of four elements, to put the state’s fiscal house in order. First, get state spending under control. Second, ensure future spending matches future recurring revenue. Third, end out-of-control borrowing and fourth, reduce the state’s crushing debt load and fund investments in infrastructure. This budget accomplishes the first task in that plan.
Recently the Governor introduced his FY09 budget which contains $2.7 in spending reductions and asks for the second-largest cut in year-to-year spending of any budget in state history. It is only the fourth budget since 1951 with a year-to-year spending reduction. Continually rising debt service payments accounted for approximately $3 billion of the budget and will continue to grow in future budgets unless the state’s $32 billion debt is drastically reduced. In fact, the state already anticipates a deficit of at least $1.7 billion for the upcoming FY10 budget.
Currently, New Jersey has one of the highest debt burdens in the country with $32 billion in bonded debt. As a result, every man, woman and child in New Jersey personally owns $3,700 of bonded State debt, about three times higher than the national average. This State debt means that the first $860 paid in individual State taxes goes to interest and debt payments. New Jersey’s unfounded pension obligations currently stand at $25 billion, with its future health care costs for retirees at $60 billion. This combination of bonded debt and unfounded liabilities translates to a debt of $45,000 per household.
Recently an article about the Governor’s proposal in the Record of Bergen County quoted Mark Tenenhaus, a vice president at the credit house Moody’s, stating, “All in all, if the plan is put in place in its entirety, it would address many of the concerns that revolve around New Jersey's general obligation credit rating and its fiscal operations.”
The state’s Transportation Trust Fund (TTF), which has underwritten transportation projects for a quarter-century, will run dry in 2011, jeopardizing $1.7 billion in federal transportation funds. Additionally, another $2.5 billion in federal funding for the ARC Tunnel into Manhattan will be lost if the state cannot come up with its share of the costs this summer. Given the previously described budget scenario it is clear that the TTF, and in turn transportation infrastructure, cannot be funded just by cutting spending.
Former Republican Congressman Bob Franks has signed on as Chairman of the Financial Restructuring and Debt Reduction Campaign. Other announced supporters include Congressman Rob Andrews, Congressman Rush Holt, the New Jersey Chamber of Commerce and more than 40 previously announced members of the Financial Restructuring and Debt Reduction Campaign Steering Committee. These Individuals are helping to build support for the Governor’s Financial Restructuring and Debt Reduction Plan all the while reinforcing the fact that this will finally set New Jersey’s finances on the right track.
Photos from Governor Corzine's public events are available in the Governor's Newsroom section on the State of New Jersey web page, http://www.nj.gov/governor/news/