January 16, 2013 - Christie Administration Affirms Financial Strength Of Sandy-Impacted Municipalities
CHRISTIE ADMINSTRATION AFFIRMS FINANCIAL STRENGTH OF SANDY-IMPACTED MUNICIPALITIES
Adversely Affected Communities Remain Sound Investment Options
TRENTON, N.J. – The New Jersey Department of Community Affairs’ (DCA) Division of Local Government Services, which oversees New Jersey municipal finance, today issued a Local Finance Notice inviting financial communities to invest in local government notes and bonds for rebuilding along the Jersey shore. The Local Finance Notice also identified key factors that protect holders of bonds and notes issued by New Jersey’s local governments.
"New Jersey’s financial regulatory system of local governments continues to be among the strongest in the nation," said DCA Commissioner Richard E. Constable, III. "As a result, 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. This makes New Jersey local government debt a stable investment, as it has been for nearly a century."
Due to the State of New Jersey’s tight regulation of local government budgeting, fiscal, auditing and debt issuance policies, every New Jersey general obligation issuer has made its debt payments for more than 80 consecutive years; and not one has filed for Chapter 9 bankruptcy protection. No local government may file for Chapter 9 bankruptcy without first receiving the approval of the state – and no such approval has ever been granted.
Local governments in New Jersey have the benefit of several state-level financial protection mechanisms, including:
- Required budgeting for local government debt obligations and the ability of the State to take over the budget process and impose the cost directly into the budget if necessary;
- Direct purchase of short-term local government debt by the State itself when needed;
- Ability of local governments to pledge regular state aid as additional credit support for local bonds, and
- Local budgets do not rely on variable revenue sources such as sales tax.
"The Division of Local Government Services places a premium on maintaining a strong relationship with the financial community," said Division Director Thomas Neff. "We understand that with a strong relationship and the trust of investors, our local governments will have earned the ability to access capital to rebuild their communities at reasonable rates."
New Jersey is committed to assisting its local governments through the Hurricane Sandy crisis and has already taken such major steps in this direction as:
- Tracking, assessing and monitoring the actual impact of the storm upon each affected municipality;
- Identifying existing FEMA assistance and lobbying for additional assistance from the federal government;
- Prioritizing state resources and regulations to assure expedited rebuilding of properties in the affected areas; and
- Meeting and working with local governments to identify any future budgetary challenges on a priority basis to organize assistance as necessary.
The Division and Local Finance Board, which regulates the issuance of debt, are committed to assuring timely and full local government debt repayments. A more formal and thorough discussion of local financial stability is contained in the Local Finance Notice pertaining to local financial stability at http://www.nj.gov/dca/divisions/dlgs/lfns/13/2013-6.pdf.
The Division of Local Government Services regulates local government interests and provides technical and financial assistance in budgeting, financial reporting, joint services, purchasing, and management issues. The Division also oversees the financial integrity of all local government units through the review and approval of all municipal, county and fire district budgets, the review of many local government financial actions, and the governance and guidance of local government officials’ conduct.
For more information, log on to http://www.state.nj.us/dca/divisions/dlgs/ on the DCA website.