Friday, August 24, 2007

New Jersey Has Casinos And Crushing Debt

New Jersey isn't taking time off from buying votes with taxpayer money to consider the long-term costs. Why should we?

Like a cash-strapped shopaholic reaching for a credit card before payday, New Jersey is planning to borrow $2 billion to cover expenses over the next few months – including those record-high property tax rebates.

But given the state's financial situation, some wonder if it's a wise move.

The state already owes an estimated $29.7 billion to creditors. Debt service alone is costing taxpayers upward of $2.5 billion a year. And employee pension funds are at least $25 billion behind where they should be to cover projected future costs.

Overall, money is so tight that Governor Corzine is looking at selling or leasing state assets, such as toll roads and the lottery, to raise revenues.

Like many states at the beginning of a fiscal year, New Jersey is short on cash to pay its bills. But New Jersey has a $2.2 billion expense coming up this year that is unusual: property tax rebate checks.

By the numbers

Total debt: $29.7 billion

Annual debt costs: $2.5 billion

Expected short-term loan: $2 billion

Cost of tax rebates: $2.2 billion

The checks – which average $1,200 for most homeowners – are timed to be in mailboxes this fall before the upcoming legislative elections.