Gov. Phil Murphy and state Treasurer Elizabeth Maher Muoio announced Thursday that the Department of the Treasury has successfully completed the most recent effort to retire outstanding debt, saving taxpayers some $160 million and reducing the state’s total debt by almost $500 million.
The announcement is a continuation of efforts by the administration, which has allocated more than $9.25 billion toward the Debt Defeasance and Prevention Fund to improve the state’s long-term fiscal health and substantially reduce outstanding debt.
Since the inception of the fund, the state has defeased a total of $3.686 billion in bond principal, saving state taxpayers $1.358 billion in interest expense.
“Today’s announcement marks a significant step in our administration’s commitment to strengthen our state’s finances,” Murphy said. “By deploying almost $500 million to retire outstanding debt, we are continuing our pledge to lessen the burden on New Jersey taxpayers and create a more affordable state. Paying down our debt in a fiscally responsible way not only saves taxpayer money, but it also frees up funding to invest back into making New Jersey a great place to live, work, raise a family and retire.”
Muoio obviously was thrilled, too.
“This latest successful round of defeasance is a testament to the talented and hard-working staff in our Office of Public Finance,” she said. “The substantial savings generated continues to further the governor’s goal of providing for a stronger, fairer and more affordable state.”
Heres’ a breakdown of what the state did:
- Bonds defeased: Between Oct. 19-Jan. 10, the state conducted six separate purchases of U.S. Treasury securities using $500 million available for debt defeasance in the New Jersey Debt Defeasance and Prevention Fund. In total, $484 million in New Jersey Economic Development Authority School Facilities Construction Bonds, N.J. General Obligation Bonds and N.J. Building Authority Bonds were defeased.
- Savings: The bonds that have been defeased had a total debt service cost of $660 million, including principal and interest, over their remaining life. When measured against the cost of purchasing the securities, the net savings to the state is $160 million over the life of the bonds.