By Seth Grossman, Political Columnist
??? “Like it or not, we owe contracts.?? We owe obligations to people as we go forward.?? One thing I’m not going to do is I’m not going to break contracts.?? We signed the contracts and we have an obligation to live up to them”.?? Governor Jon Corzine at “Town Hall” Meeting in Toms River, New Jersey on February 2, 2008.
??? This is the big lie of Governor Jon Corzine’s scheme to increase New Jersey’s debt from $113 billion (3.5 times what the state collects in taxes each year) to $148 billion (4.6 times current annual tax collections).?? Corzine calls his plan “the best of all possible options”.?? And for NJ politicians, it is.?? Most toll hikes will be paid by people who can’t vote in the next election – out-of-state motorists, our children, grandchildren, and great-grandchildren.??
??? But Corzine is wrong.?? New Jersey citizens today have no legal, moral, or practical obligation to honor big chunks of that $113 billion debt.
??? Article 8, Section 2, Paragraph 3 of the New Jersey Constitution bars state government from incurring any “debts” or “liabilities” that cannot be repaid within the “fiscal year”, unless approved by vote of the people.??
??? Governor Corzine admits that NJ voters approved only $3 billion (less than one percent) of the $113 billion of state “debts” and “liabilities” he wants us to “live up to”.
??? In 2003, Republican Mayor of Bogota, Steve Lonegan asked the NJ Supreme Court to stop the state from borrowing roughly $27 billion without a public vote.
??? The state set up the NJ Sports and Exposition Authority, the NJ Educational Facilities Authority, the NJ Economic Development Authority, and the NJ Transportation Trust Fund Authority as dummy agencies to borrow the money.
??? Since these agencies had no money to repay the loans, Republican Governor Whitman and Democrat Governor McGreevey made 30-year contracts to give them the taxpayer money they needed.
??? Corzine says this was wrong, and now wants to close that loophole with a constitutional amendment.?? But the NJ Supreme Court did that in Steve Lonegan’s 2003 case when it ruled:??
???? “(O)nly debt that is legally enforceable against the State is
subject to the Debt Limitation Clause (requiring a vote of the people). . . When contracts or appropriations-backed debt is issued, however, the State does not pledge its full faith and credit, and is not legally bound to make payment on that debt”.
??? Our Supreme Court said the same thing when the state made “leases” with these authorities.
??? “As with other types of appropriations-backed debt, the State is not legally bound to make the rental payments, and can opt not to do so”.
??? Last December, while Governor Corzine was putting the finishing touches on his toll hike plan, the NJ Educational Facilities Authority borrowed $40.25 million more “contract” debt–again without voter approval.
??? Each of its new “Revenue Bonds, The Richard Stockton College of New Jersey Issue, Series 2007G” contain the following words in bold, capital letters:
??? “THE SERIES 2007 G BONDS ARE SPECIAL AND LIMITED OBLIGATIONS OF THE AUTHORITY, AND ARE NOT A DEBT OR LIABILITY OF THE STATE OF NEW JERSEY, OR ANY POLITICAL SUBDIVISION THEREOF, OTHER THAN THE AUTHORITY (TO THE LIMITED EXTENT SET FORTH IN THE TRUST INDENTURE). . . ”
??? These bonds have higher risk, and probably yield higher interest.?? The bond insurance companies should charge higher premiums for that risk.?? We have no legal obligation to repay that money.??
??? We also have no moral obligation to pay that money.?? Our NJ Constitution was designed to stop today’s politicians from putting future generations into debt.
??? But won’t we pay a high price, if we let those bonds default??? As a lawyer who helped private clients with debt problems for 33 years, I don’t think so.?? We will pay some extra interest in future borrowings.?? But that will be peanuts compared to paying back $27 billion with interest for the next 77 years!
??? If we stiff those who sought to profit from end runs around our NJ Constitution, we get this added bonus.?? The political insiders who set up these deals will probably face civil, if not criminal actions.?? Never again will our politicians borrow money without voter approval!?? Is this why Governor Corzine and his Wall Street friends are fighting so hard to make us repay this debt??? (Copies of all documents referred to above can be found at www.libertyandprosperity.org.)