A New Jersey Republican senator believes the state should disclose in a preliminary official statement for its $1.92 billion note deal, scheduled to price today, a state legislative agency's estimated $8 billion fiscal 2011 deficit and projected $2 billion shortfall in the unemployment fund in the current fiscal year, which began July 1.

Sen. Anthony Bucco, R-Morris, who wrote yesterday to Gov. Jon Corzine, a Democrat, and state Treasurer David Rousseau, also claims the state should update revenue collection figures listed in the 147-page POS.

The document includes forecasted information for the period "post-June" for income tax and sales tax collections of $669.8 million and $736 million, respectively. The state's consolidated financial system's post-June tax receipts, as of Aug. 4, are $255.9 million for income taxes and $682 million for sales taxes.

"We ask that you change the document so it explains projected structural deficits that will place pressures on this year's budget and more clearly and fully explains the state's revenue situation based on current revenue collection data," Bucco said in the letter, dated yesterday.

As the notes will mature on June 24, 2010, market participants suggested that the securities may be outstanding for such a short period of time that some of the information that Bucco has called for may not be material.

In response to Bucco's letter, the state Treasury Department said it has worked with its disclosure counsel at Wilentz, Goldman & Spitzer to offer investors comprehensive information on New Jersey's fiscal state.

"The information in the POS is prepared in close consultation with disclosure counsel to ensure that investors get the most complete, up-to-date, and transparent representation of New Jersey's finances. The allegations made in the letter are baseless in that the information is disclosed where appropriate," said Treasury spokesman Tom Vincz. "The disclosed information is in keeping with the most rigorous and complete disclosure procedures of any previous administration, Democrat or Republican.

"In accordance with established statutory provisions relating to the budgetary practices, the administration will make the budget projections for fiscal year 2011 in February 2010. Projections by the Office of Legislative Services reflect subjective assumptions about a budget that is six months away from being proposed."

Some observers in New Jersey have speculated that Bucco's letter is politically motivated, as Corzine, a Democrat, is facing re-election this year.

Moody's Investors Service Monday revised its outlook on New Jersey to negative from stable, citing such fiscal challenges as more than $32 billion of outstanding debt, a structural imbalance, and an empty rainy-day fund.

"Through several administrations, the state has utilized non-recurring solutions to resolve budgetary gaps, leaving the state with a sizeable structural imbalance, one of the highest debt burdens, one of the lowest-funded pension ratios, and one of the highest post-retirement health insurance liabilities in the country," according to a Moody's report.

The outlook change affects approximately $2.5 billion of general obligation bonds and $28.5 billion of state appropriation debt. Moody's rates New Jersey Aa3. Standard & Poor's and Fitch Ratings assign the state their AA and AA-minus ratings, respectively. Both agencies have stable outlooks for the credit.

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