New Jersey governor floats lead remediation bond plan

New Jersey Gov. Phil Murphy wants to put a $500 million bond referendum before voters to help pay for making the state’s water systems lead-free in the next decade.

Murphy outlined a multi-pronged strategy last week to combat lead exposure challenges that includes asking voters for the bond measure in November 2020. The bonding would support the replacement of lead service lines and remediation of lead-based paint in homes across New Jersey.

David Paul Morris/Bloomberg

“I am today putting forward a goal for New Jersey to remove and replace all lead service lines across our state within the next 10 years,” said Murphy during a press conference Thursday at Thomas Jefferson State University. “This is a huge task and it will require partnership … and further investments by water systems, developers and county and local governments and authorities.”

Murphy announced his bond proposal the same day that the infrastructure advisory group Jersey Water Works released a report saying that replacing New Jersey’s 350,000 lead service lines would cost an estimated $2.3 billion based on estimates from the American Water Works Association. The Democratic governor said the referendum number could increase but that he expects $500 million to be enough when factoring in federal monies already available from the Environmental Protection Agency and state funds from the New Jersey Infrastructure Bank. He added that investor-owned water utilities could also fund some of the water in their municipalities through rate increases.

In August, New Jersey’s largest city, Newark, discovered two homes had exceeded federal lead standards in August. Essex County is aiding Newark with its replacement of 18,000 lead pipes through a $120 million bond financing on behalf of the city and Murphy followed up by announcing $100 million from the voter-approved $500 million Securing Our Children Future Bond Act would be earmarked for lead remediation at schools statewide.

“Lead and water has been making the headlines in New Jersey recently in particular because of the immediacy that an aging water infrastructure has forced upon us,” Murphy said. “Newark may be where this problem is making the most news, but it is a problem that we know extends far beyond that city’s borders.”

The state Assembly and Senate must approve placing the bond measure on the ballot. Senate President Steve Sweeney, D-Gloucester, and Assembly Speaker Craig Coughlin, D-Fords, issued separate statements offering support for the bond measure and other proposals Murphy laid out to tackle the state’s lead crisis.

“I welcome the governor’s proposals as a recognition of the need for a plan of action to combat the threats to the health and safety of New Jersey’s residents posed by lead contamination,” Sweeney said. “We will give all of the proposals that need legislative approval serious consideration and work with the Assembly and the administration to get them done.”

New Jersey has the second lowest-rated state GO bonds in the nation due largely to a steep pension burden. The Garden State’s debt is rated A3 by Moody’s Investors Service, A-minus by S&P Global Ratings and A by Fitch Ratings and Kroll Bond Rating Agency.