Analysis ranks New Jersey as one of most bonded debt burdened states in country
(The Center Square) – With a per-capita figure of $6,401 hanging in the balance, New Jersey places near the bottom of a new study looking at the amount each state is shouldering in long-range bonded debt across the country.
The American Legislative Exchange Council, or ALEC, ranked New Jersey No. 44 in its annual report of states’ bonded obligations, based on the per-capita figures. The findings were based on financial data reported through Dec. 31, 2020, according to ALEC researchers.
New Jersey’s per-capita figures places it above the national average of $3,800 per person, according to ALEC. By contrast, Wyoming, the state taking the top spot in the roundup, has a per-capita bonded debt obligation of $67 per person. Connecticut, at No. 50, has a per-capita figure of $12,055 on its books.
With population figures taken out of the equation, New Jersey continued to rank among the states with the highest bonded debt burdens across the country.
In total, the state finished 2020 with $56.8 billion in total bonded obligations on it books, ranking it No. 45. Top-finisher Wyoming had $38.9 million in bonded debt as of Dec. 31, while California, at No. 50, reported $209.2 billion in bonded obligations.
New Jersey gained attention this past year for its debt policies when state lawmakers green lit a plan to borrow $4.3 billion and add new debt to the ledger to shore up revenue losses amid deliberations on the new state budget.
Organizations such as the Garden State Initiative, a nonpartisan research organization, spoke out against the issuance of new debt.
“We argued that legal arguments aside, the proposal was premature, excessive and added additional billions of dollars and years of debt service to one of the most indebted and highly taxed states in the union,” William J. Smith of GSI wrote in a June analysis.
Based on terms of the new debt, New Jersey’s freshly issued $4.3 billion in new debt is not callable, meaning payments cannot be made earlier. Interest payments for the debt issuance will occur for the next dozen years.
Many of the states ranking toward the bottom of ALEC’s latest report on bonded debt obligations have higher populations. But ALEC researchers say legislators across the country can look at policies to control the amount of debt taken out. The Virginia-based organization advocates for fiscal reform in the government sector.
“Many states are continuing to use bonds to increase government spending and pass the buck to future generations of taxpayers,” Jonathan Williams, ALEC chief economist and executive vice president of policy, said in a statement.
Williams pointed to states such as Indiana and Nebraska — which placed No. 2 and No. 3, respectively — in the per-capita ranking for having laws in place that limit debt borrowing. Indiana’s per-person debt burden currently stands at $200, while Nebraska’s is $667 per person.
“Fortunately, states like Indiana and Nebraska have constitutional amendments to keep debt limits relatively low and provide valuable lessons for policymakers in states suffering from significant debt burdens,” Williams said.
In its latest analysis, ALEC researchers said all states across the country collectively have bonded debt burdens in excess of $1.25 trillion, equating to an annual obligation of $3,800 per person.
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