N.J. debt grew 7% despite Corzine's push to cut back

New Jersey taxpayers' state debt grew by $2.1 billion in the last fiscal year despite calls by Gov. Corzine to rein in borrowing.

The state's debt stood at $31.9 billion on June 30, a roughly 7 percent increase from a year earlier. An additional $800 million in bonds has been issued since June 30, according to the latest report by the state Treasury.

Treasurer David Rousseau said yesterday that the administration might also have to rethink its plan to pay off $650 million of debt.

With New Jersey facing a budget shortfall of at least $400 million - an amount likely growing due to the recent economic downturn - some money set aside for debt reduction may have to go toward other expenses, he said in news reports.

The debt-reduction plan was a key component of Corzine's latest budget, but he is anticipating rapidly falling revenues.

Debt payments cost $2.7 billion in the current budget. The planned debt reduction would have saved about $130 million per year.

Corzine targeted the state's old borrowing earlier this year, arguing that the cost of essentially paying off the state's credit-card bill consumes an ever-larger portion of the budget and "crowds out" other needs.

But his plan to drastically reduce overall debt was shot down by lawmakers and a public unwilling to accept the steep toll hikes that would have made that possible.

Treasury spokesman Tom Vincz said 93 percent of the new debt in the past year was for school or transportation projects previously approved.

New Jersey now has the third-largest tax-supported debt load in the nation, according to the report.

Republicans criticized the mounting costs.

"This is horrible news for middle-class New Jerseyans and taxpayers," said Assemblywoman Marcia Karrow (R., Hunterdon).

The $31.9 billion figure does not include items such as long-term pension and health-care obligations, bonds that are to be paid off by a national settlement with tobacco companies, and debt owed by entities such as the New Jersey Turnpike Authority and the South Jersey Transportation Authority.