Deal struck to hike NJ gas tax 23 cents
- Thread starter 92 Blazer Jeff
- Start date
Ed, it's more complex than what 101.5 says. You have to really make up your own mind (if you can). Don't listen to that man behind the curtain.
http://www.nj.com/opinion/index.ssf/2016/10/vote_yes_on_question_2_gas_tax_revenue_lockbox_edi.html
http://www.nj.com/opinion/index.ssf/2016/10/vote_yes_on_question_2_gas_tax_revenue_lockbox_edi.html
I can't answer if I understand it better then anyone else, but I can say I used to work in the corporate world and have degrees in both accounting and finance, so I do have some level of understanding. That said, I think I'd be wearing an orange jump suit if i had tried to operate like the government does.
100% agree with you on issuing bonds to pay for everything. Slight clarification though: The state is not behind on payments, but rather has passed the point where the old gas tax no longer covered the debt service payments. The difference in what was collected from the gas tax and what was due on the TTF debt service payments had to come from another revenue source (in this case the Sales and Use Tax).
That would seem to be a quite reasonable position, but unfortunately regardless of how this vote goes a large portion of the tax dollars collected with go towards debt service. Further, the 'yes' crowd talks about a lock box for the funds - gives the image they will have a big piggy bank sitting up in Trenton from which they can dole out real money to pay for projects, right? But that is laughable because their new transportation plan, which requires a 'yes' vote, calls for new bonding of at least $12 Billion over the next 8 years - so don't expect a change in the foreseeable future if you vote yes. The Legislature could easily statutorily protect the new gas tax receipts, but then, they wouldn't have the needed 'Constitutionally Dedicated' source to allow more borrowing.
A 'yes' vote seems like the logical choice on the surface, and they are pushing the positives in their PR campaign - notice how the NJ.com article doesn't mention the new bonding? Nor does the interpretive statement on the ballot mention it. I think the 'yes' supporters are being purposely vague around explaining the implications of the ballot question, making very difficult to get the info to make up your own mind -and that doesn't feel right. But the more I dig into this, the more it seems like a yes vote will support business as usually and create more debt for future generations to pay.
I'm inclined to vote NO on the question.
Seems damned if you do, damned if you don't. I'd like the money fenced off, but I'm also leery of a NO vote. If it gets voted down, then the money servicing the debt is taken from the tax increase, now and if needed from any future gas tax increases. It would seem much cleaner if the money in the TTF only went toward capital improvements. It would be more visible and easier for the public to see where we stand.
Maybe the solution is to translate it differently, make two categories:
TTF (CI): Capital improvements money (Real Money).
TTF (DS): Debt and Debt Service.
Yes, this is a damned if you do, damned if you don't question - either way the public stands to lose. I'd like the money fenced off to, but not if they are going to use it to mortgage our future, which, based on my understanding, is their plan. It would be very nice if this was made more clear, but I don't think the powers that be gain anything from that - much easier to get their way if they only communicate in sound bites that support their actions.
That would be nice, but it's more complicated then that. Tell me to stop if you already understand this but - Selling a bond is a positive cash flow (creates real money) for the state, while at the same time creating a liability that must be paid in the future. The debt service is the payment that is due on outstanding bonds in a given year. All of the appropriated revenue (fuel tax + S&U tax) has been going towards debt service. They have been funding any transportation projects by issuing more bonds, but now have reached the limit of what they can borrow. So now they need to create new revenue source they can mortgage. Look at the Quick Facts chart in the above link ( http://www.state.nj.us/ttfa/ )
I've been trying to figure this out for two weeks now, and its quite confusing, so please help me see if I'm missing something or help me see where a yes vote is the way to go.
That would be nice, but it's more complicated then that. Tell me to stop if you already understand this but - Selling a bond is a positive cash flow (creates real money) for the state, while at the same time creating a liability that must be paid in the future. The debt service is the payment that is due on outstanding bonds in a given year. All of the appropriated revenue (fuel tax + S&U tax) has been going towards debt service. They have been funding any transportation projects by issuing more bonds, but now have reached the limit of what they can borrow. So now they need to create new revenue source they can mortgage. Look at the Quick Facts chart in the above link ( http://www.state.nj.us/ttfa/ )
I've been trying to figure this out for two weeks now, and its quite confusing, so please help me see if I'm missing something or help me see where a yes vote is the way to go.
So you are saying that debt service is dividends to bondholders, and maybe those who cash them in. If yes, that is what I thought.
Seems kind of weird that a lot of the debt holders may be NJ citizens. Making money off the backs of fellow citizens. I know, not totally like that, but enough to seem kind of, I don't know....circular?
Seems kind of weird that a lot of the debt holders may be NJ citizens. Making money off the backs of fellow citizens. I know, not totally like that, but enough to seem kind of, I don't know....circular?
The terminology you are using is not correct, but I think you have the idea. Dividends are monies (usually profits) paid to shareholders (the business owners). With bonds it is a little different. Bonds are more similar to a loan - the person that takes the loan, the issuer (the state in our case) sells bonds to creditors or bond holders (they would be the bank in the loan example). In many cases the bond holders are large institutional investors - hedge funds, mutual funds, even pension funds, at least in the primary market. You very well may own some of these bonds yourself if you have a pension or 401K, etc.
The issuer (the state) agrees up front on the interest rate, payment schedule and maturity date. Interest payments are made at the prescribed periods and are typically interest only (this is the debt service). The full amount of principal is usually paid on the maturity date, at the end of the bonds term.
Obviously, it is a lot more complicated then that in reality, but that is the gist of it.
The issuer (the state) agrees up front on the interest rate, payment schedule and maturity date. Interest payments are made at the prescribed periods and are typically interest only (this is the debt service). The full amount of principal is usually paid on the maturity date, at the end of the bonds term.
Obviously, it is a lot more complicated then that in reality, but that is the gist of it.
Yes, you are right, I used the wrong term.
Not the same as corporate or state/municipal bonds, but I remember owning quite a few U.S. Savings bonds. I think I paid, like $18 for a $25 bond....and after X number of years (7?) I cashed it in for $25. I don't think they sell them anymore. I remember cashing in some before the term, and they prorated the gain.
Not the same as corporate or state/municipal bonds, but I remember owning quite a few U.S. Savings bonds. I think I paid, like $18 for a $25 bond....and after X number of years (7?) I cashed it in for $25. I don't think they sell them anymore. I remember cashing in some before the term, and they prorated the gain.
My first good paying job out of high school was at Manufacturers Hanover Trust working in their securities department on the First Boston account. Hated it, lasted 7 months. An awful lot of paper passed thru my hands. 
They are what helped buy our first home. The traditional paper ones came to an end in 2012, the digital age version is available.
https://www.treasury.gov/services/Pages/Savings-Bonds.aspx
They are what helped buy our first home. The traditional paper ones came to an end in 2012, the digital age version is available.
https://www.treasury.gov/services/Pages/Savings-Bonds.aspx
Maybe this will help, a lot of smoke and mirrors with question #2.
http://nj1015.com/half-of-njs-new-g...-pay-back-old-debt-can-state-curb-that-trend/
http://nj1015.com/half-of-njs-new-g...-pay-back-old-debt-can-state-curb-that-trend/
Just another trick question with smoke and mirrors thrown in.
Vote yes and you allow more borrowing. Take a read of the the 2008 amendment.
Vote yes and you allow more borrowing. Take a read of the the 2008 amendment.
When I weigh all the evidence after reading this below article, and the comments attached to it, I will vote opposite of no.
http://www.njspotlight.com/stories/...rm=0_1d26f473a7-6248188fbe-398650705#comments
http://www.njspotlight.com/stories/...rm=0_1d26f473a7-6248188fbe-398650705#comments
Circular reference mentioned in post #67 confirmed. Are they making money off the backs of fellow citizens or now stuck paying more for their own retirements?
TTF beefs up ability to sell bonds directly to state pension funds
TTF beefs up ability to sell bonds directly to state pension funds
