Contact Us
Fort Lee Daily Voice serves Fort Lee, Leonia & Palisades Park
Return to your home site

Menu

Fort Lee Daily Voice serves Fort Lee, Leonia & Palisades Park

Nearby Towns

DV Pilot police & fire

N.J. taxpayers losing $1 million a month for bonds that don’t exist

Photo Credit: Cliffview Pilot

Are you ready for this? New Jersey taxpayers reportedly are paying nearly $1 million a month to a partnership run by Goldman Sachs Group for protection against rising interest costs on bonds that no longer exist .


Bloomberg News broke the story today: The payments are the result of a “debt swap” the McGreevey administration made with Goldman in 2003, after New Jersey’s Transportation Trust Fund Authority sold $345 million in auction-rate bonds whose yields fluctuated with short-term interest costs. The state has since replaced the bonds with fixed-rate debt, but the agreement remains in place.

According to Bloomberg, the state can’t cancel the deal until after 2011 without paying a penalty of roughly $37.6 million to get out.

As a result, Bloomberg reports, “the state paid $940,000 under the agreement last month and a total of $11.4 million since the auction-rate bonds were redeemed.”

The fund is reaching its borrowing limit as Gov. Corzine, a former Goldman chairman who was a U.S. senator at the time the deal was made, tries to find $400 million in budget cuts. “The payments are draining money from a dwindling account that may not be able to support new projects because the $895 million in annual gasoline taxes and toll revenue dedicated to the fund will be needed to pay down $10.3 billion in debt,” Bloomberg reports.

To help prop up spending, officials have suggested raising New Jersey’s 14.5 cents-a-gallon gas tax, the fourth-lowest in the country.

to sign up for Daily Voice's free daily emails and news alerts.

Welcome to

Fort Lee Daily Voice!

Serves Fort Lee, Leonia & Palisades Park

Get the news you need to know on the go.

Welcome to

Fort Lee Daily Voice!

Serves Fort Lee, Leonia & Palisades Park

Hi! You've read our articles so we know you like our reporting. To keep reading please join our mailing list.

Get important news about your town as it happens.