N.J. Takes Out ‘Bridge Loan’ to Cover Expenses, Again
The same day New Jersey’s new $32.1 billion budget went into effect, the state took out a short term bridge loan worth $2.6 billion from J.P. Morgan. Without it, the state wouldn’t have been able to meet its expenses.
This is actually a common occurrence. The loan was $2.6 billion in 2006; in 2011 it was $2.25 billion. The state has been taking out extra money for more than two decades now, but the process of doing it at the start of the fiscal year dates back just to Jon Corzine. “There are climbing imbalances between receipts of funds and disbursement of funds, which has led the state to have a [type of] short term borrowing… since 1991,” Chris Santarelli, a Treasury spokesman, told The Star-Ledger.
The Christie administration already delayed $395 million in property tax rebates and cut a pension payment from $2.25 billion to $681 million in order to make the budget work. The property tax rebates are scheduled to be paid out nine months from now.
“When you’re running out of money, you’ve got to manage your cash carefully, You’ve got to prioritize your bills and decide which ones you absolutely must pay,” Christie said in May.