Debt refinancing reduces borrowing costs, resulting in a significant cost savings for taxpayers

(TRENTON) — The Joint Budget Oversight Committee today approved a proposal by the Transportation Trust Fund Authority to issue up to $3.25 billion dollars in bonds to refund outstanding debt, which would result in a significant cost savings for the state.

The restructuring would reduce debt payments, as well as result in fewer new bonds being issued through fiscal year 2029, resulting in additional savings.

Specifically, based on current rates, the Transportation Trust Fund Authority proposal will reduce debt service payments from now until 2029 by approximately $1 billion. This savings will be used to pay a larger portion of upcoming TTF projects. Joint Budget Oversight Committee approval is needed before refunding can proceed.

Paying cash instead of borrowing also generates an estimated $2.4 billion in avoided debt payments from fiscal year 2026 to fiscal year 2056.

“Today’s sound financial decision means a billion dollars more going directly to transportation projects across New Jersey, and nearly two and a half billion dollars less in debt,” said Assembly Speaker Craig J. Coughlin (D-Middlesex). “Taking advantage of our sound financial decisions means less borrowing, less debt for future generations, and more money to do the things New Jersey needs like fixing potholes and building the infrastructure we need to move our state forward. The flexibility to make decisions like this is thanks to the years of work we’ve put in to get our fiscal house in order, and today, New Jersey family are the winners.”

Thanks to New Jersey’s strong credit rating, the Transportation Trust Fund Authority is able to take advantage of lower interest rates and refinance a portion of its debt.

“From fully funding our schools to making pension payments and providing property tax relief, we’ve met our fiscal responsibilities and are saving residents money,” said Assemblywoman Lisa Swain, Chair of the Assembly Appropriations Committee (D-Bergen). “Reducing our long term debt is prudent for the state overall, and one way we are putting New Jerseyans first.”

The committee vote on the refunding request was 6-0.