New Jersey lawmakers yesterday approved legislation that would decrease the state's $650 million debt defeasance fund by $125 million to support urgent social needs throughout the state.
Senators passed four bills that will offer loans to small businesses, finance school construction projects, support food and energy assistance programs, and legal aid and mortgage counseling, among other programs. Two of the measures will now go before Gov. Jon Corzine, and it's anticipated he will sign off on the bills as his administration proposed the initiatives in October.
Corzine created the $650 million fund in June from surplus revenue with the goal of using those funds to pay down outstanding bonds, thereby decreasing debt service costs. Defeasing nearly $650 million of debt would generate $135 million of debt service savings in fiscal 2009, which began July 1, and offer roughly $130 million of savings per year for the next four fiscal years.
Outstanding bonds and debt service payments are an issue for the state. Debt service costs reached $2.8 billion this fiscal year, taking up nearly 8% of New Jersey's current $32 billion budget. In addition, the state is facing a $1.2 billion deficit in fiscal 2009 and officials expect that shortfall to grow to $5 billion in fiscal 2010.
Lawmakers yesterday stressed that New Jersey residents need immediate assistance. Of the $125 million, $50 million will support small business loans and finance economic recovery fund bonds that will help support school construction projects. Roughly $22.5 million will go towards food banks, energy assistance and legal aid while mortgage counseling services and foreclosure mediation programs will gain $12.5 million.
In addition, the $125 million allocation includes a $40 million initiative to keep qualified homeowners who are on the brink of foreclosure in their homes. Senators also passed that measure yesterday. It has yet to be introduced in the General Assembly.