As many as 15 towns may lose 10 percent or more of their tax base, and another 10 could see a 5 percent to 10 percent decline, the state’s Local Government Services division said in a finance notice. Even so, it said those losses are mostly temporary as New Jersey rebuilds from the Oct. 29 storm that left parts of the coast uninhabitable and without power.
Because of New Jersey’s regulation of local budget and debt policies, every general-obligation issuer has made its payments for more than 80 years and not one has filed for Chapter 9 bankruptcy protection, the division said.
“The state can and does use its authority to ensure that all debt obligations are paid timely and in accordance with their terms, even in times of financial crisis,” Richard Constable, commissioner of the Community Affairs Department, which oversees the muni division, said in a statement. “This makes New Jersey local government debt a stable investment, as it has been for nearly a century.”
The biggest Atlantic storm on record cost New Jersey an estimated $36.9 billion after sweeping ashore, killing 38 people in the state and blacking out 2.7 million. While states and localities expect the federal government to reimburse at least 75 percent of their response and cleanup expenses, some towns are borrowing to cover bills before those payments arrive.
The division encouraged all local government officials seeking to sell debt to share the notice “to obtain the best possible interest rates.”
“The state is committed to assuring timely and full local- government debt repayments,” Constable said.
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