ACR75

A Concurrent Resolution proposing to amend Article VIII, Section II, paragraph 3 of the Constitution of the State of New Jersey.

Be It Resolved by the General Assembly of the State of New Jersey (the Senate concurring):

1. The following proposed amendment to the Constitution of the State of New Jersey is agreed to:

PROPOSED AMENDMENT

Amend Article VIII, Section II, paragraph 3 to read as follows:

3. a. The Legislature shall not, in any manner, create in any fiscal year a debt or debts, liability or liabilities of the State, which together with any previous debts or liabilities shall exceed at any time one per centum of the total amount appropriated by the general appropriation law for that fiscal year, unless the same shall be authorized by a law for some single object or work distinctly specified therein. Regardless of any limitation relating to taxation in this Constitution, such law shall provide the ways and means, exclusive of loans, to pay the interest of such debt or liability as it falls due, and also to pay and discharge the principal thereof within thirty-five years from the time it is contracted; and the law shall not be repealed until such debt or liability and the interest thereon are fully paid and discharged. Except as hereinafter provided, no such law shall take effect until it shall have been submitted to the people at a general election and approved by a majority of the legally qualified voters of the State voting thereon.

b. On and after the date on which this subparagraph b. becomes part of the Constitution, the Legislature shall not enact any law that, in any manner, creates or authorizes the creation of a debt or liability of an autonomous public corporate entity, established either as an instrumentality of the State or otherwise exercising public and essential governmental functions, which debt or liability has a pledge of an annual appropriation as the ways and means to pay the interest of such debt or liability as it falls due and pay and discharge the principal of such debt, unless a law authorizing the creation of that debt for some single object or work distinctly specified therein shall have been submitted to the people at a general election and approved by a majority of the legally qualified voters of the State voting thereon. Voter approval shall not be required for any such law providing that the ways and means to pay the interest of and to pay and discharge the principal of such debt or liability shall be subject to appropriations of an independent non-State source of revenue paid by third persons for the use of the single object or work thereof, or from a source of State revenue otherwise required to be appropriated pursuant to another provision of this Constitution.

c. No voter approval shall be required for any such law under subparagraphs a. or b. of this paragraph authorizing the creation of a debt or debts in a specified amount or an amount to be determined in accordance with such law for the refinancing of all or a portion of any outstanding debts or liabilities of the State, or of an autonomous public corporate entity, established either as an instrumentality of the State or otherwise exercising public and essential governmental functions, heretofore or hereafter created, so long as such law shall require that the refinancing provide a debt service savings determined in a manner to be provided in such law and that the proceeds of such debt or debts and any investment income therefrom shall be applied to the payment of the principal of, any redemption premium on, and interest due and to become due on such debts or liabilities being refinanced on or prior to the redemption date or maturity date thereof, together with the costs associated with such refinancing.

d. All money to be raised by the authority of such law shall be applied only to the specific object stated therein, and to the payment of the debt thereby created.

e. This paragraph shall not be construed to refer to any money that has been or may be deposited with this State by the government of the United States. Nor shall anything in this paragraph contained apply to the creation of any debts or liabilities for purposes of war, or to repel invasion, or to suppress insurrection or to meet an emergency caused by disaster or act of God.

f. The Legislature shall appropriate no funds in repayment of any debt or liability incurred by any autonomous public corporate entity, established either as an instrumentality of the State or otherwise exercising public and essential governmental functions, or by any private entity, unless such debt or liability, prior to being incurred, shall have been approved by the voters in the same manner as provided in subparagraph a. or b. of this paragraph.

(cf: Art. VIII, Sec. II, par. 3; amended effective December 4, 2008)

2. When this proposed amendment to the Constitution is finally agreed to pursuant to Article IX, paragraph 1 of the Constitution, it shall be submitted to the people at the next general election occurring more than three months after the final agreement and shall be published at least once in at least one newspaper of each county designated by the President of the Senate, the Speaker of the General Assembly and the Secretary of State, not less than three months prior to the general election.

3. This proposed amendment to the Constitution shall be submitted to the people at that election in the following manner and form:

There shall be printed on each official ballot to be used at the general election, the following:

a. In every municipality in which voting machines are not used, a legend which shall immediately precede the question, as follows:

If you favor the proposition printed below make a cross (X), plus (+), or check (T) in the square opposite the word "Yes." If you are opposed thereto make a cross (X), plus (+) or check (T) in the square opposite the word "No."

b. In every municipality the following question:

		PROHIBITION ON STATE PAYMENT OF DEBT UNLESS DEBT HAS BEEN APPROVED BY VOTERS
	YES	Shall the amendment to Article VIII, Section II, paragraph 3 of the Constitution of the State of New Jersey, agreed to by the Legislature, prohibiting the Legislature from appropriating funds for the repayment of any debt or liability incurred by any State agency, commission, authority, or any other entity or instrumentality of the State, or by any private entity, unless such debt or liability shall have been approved by the voters in the same manner as a debt or liability of the State, or in the same manner as a debt or liability of an autonomous public corporate entity, which debt or liability has a pledge of an annual appropriation as the ways and means to pay the interest of such debt or liability as it falls due and pay and discharge the principal of such debt, be approved?
		INTERPRETIVE STATEMENT
	NO	This proposed constitutional amendment would extend the constitutional requirement for voter approval of State debt. It would require voter approval for State independent authority debt backed by a pledge of an annual appropriation of the Legislature under a law enacted prior to December 4, 2008. Already, State general debt and State independent authority debt backed by legislative appropriation under laws enacted after December 3, 2008 must be approved by the voters. Specifically, this proposed constitutional amendment would prohibit the Legislature from appropriating money to pay a debt or liability of a State agency, commission, authority, or any other entity or instrumentality of the State, or of any private entity, unless, before the debt is undertaken, voters approve it in the same manner that a general debt or liability of the State is approved.

STATEMENT

This concurrent resolution proposes an amendment to Article VIII, Section II, paragraph 3 of the Constitution which would prohibit the Legislature from appropriating funds for the repayment of a debt or liability incurred by any State agency, commission, authority, or the like, or by any private entity, unless the incurrence of the debt or liability is approved by the voters. Voter approval would be done according to the procedure set forth in Article VIII, Section II, paragraph 3 of the Constitution.

This proposed amendment does not concern general obligation bonds because general obligation bonds are approved by the people in accordance with constitutional procedure before issuance. Also, this proposed amendment does not concern certain State independent authority debt backed by a pledge of an annual appropriation which are authorized by law enacted after December 3, 2008. A constitutional amendment approved at the November 4, 2008 general election and effective on December 4, 2008, required voter approval for such debt. Thus, this proposed amendment is concerned with bonded indebtedness issued by State agencies, commissions, authorities, or any other entity or instrumentality of the State, or private entities which are appropriation "contract debts" authorized by laws enacted before December 4, 2008. In "contract debt" bonds, the State Treasurer and the issuer of the debt enter into a contract concerning payment from the general state revenues, subject to appropriation by the Legislature.

"Revenue bonds," such as those issued by the New Jersey Turnpike Authority, are repaid from the revenues generated by the issuing entity. Over the course of many years, the benefits of these "revenue bonds" have been clearly and consistently demonstrated. Unless "revenue bonds" also contain "contract debt" provisions, they would not be affected by this proposed amendment.

The purpose of this amendment is to ensure that "contract debt" or other debt or liability incurred by State agencies, commissions, authorities, or any other entity or instrumentality of the State, or private entities, authorized by laws enacted before December 4, 2008, does not, without voter approval, become the de facto obligation of the people to repay. If adopted, this amendment would preclude the State from expending any monies to repay bonds which have not been approved by the people at referendum. This negates the possibility of evading the requirement that the public vote before debt is incurred, while retaining the ability for entities to sell bonds which are not to become the obligation of taxpayers to repay.