III. Know the Law.
The NJ Supreme Court repeatedly ruled that NJ taxpayers legally owe only 2% of that $183 billion of debts and pensions. Public offering statements warned investors for years that NJ “junk” bonds can be worthless at any time.
- The Language of Article VIII, Section 2 of the New Jersey Constitution is very clear:
Article VIII, Section 2:
All moneys for State government. . . shall be provided for in one general appropriation law (budget) covering one and the same fiscal year. . . The Legislature shall not, in any manner, create in any fiscal year a debt or debts, liability or liabilities of the State. . .unless (and) until submitted to the people at a general election and approved by a majority of voters. . . “
Full text at: http://www.njleg.state.nj.us/lawsconstitution/constitution.asp
- The Supreme Court of New Jersey repeatedly stated that future Legislatures cannot be forced to pay for the debts of any state authority that were not approved by voters according to Article VIII, Section 2 of the NJ State Constitution. In the case of LONEGAN ( STOPTHEDEBT.COM) vs. STATE OF NEW JERSEY, 176 N.J. 2 (2003), the NJ Supreme Court stated:
“(T)the Debt Limitation Clause is not implicated when the State is not legally obligated on debt issued subject to future annual appropriations. . . (Lonegan, at Page 8)
“(B)onds issued by New Jersey Building Authority for construction of facilities to be leased by State did not violate the Clause because payments were “subject to legislative appropriations” and State did not pledge full faith and credit to guarantee bonds. . . The debt clause applies only to obligations which are legally enforceable against the State” and that debts of corporate agency created by Legislature neither bind State nor fall under Debt Limitation Clause. . .” (Lonegan at Page 9)
“(T)he Debt Limitation Clause applies only when the State is legally obligated to make payments authorized by the Legislature.” (Lonegan, at Page 10)
- The “Public Offering Statement” for bonds issued by every state authority and the bonds themselves contain language like this which warns investors of the risk that future Legislatures may repudiate (refuse to pay) the bonds at any time:
“THE SERIES 2007 G BONDS ARE SPECIAL AND LIMITED OBLIGATIONS OF THE NJ EDUCATIONAL FACILITIES AUTHORITY AND ARE NOT A DEBT OR LIABILITY OF THE STATE OF NEW JERSEY OR OF ANY POLITICAL SUBDIVISION THEREOF OTHER THAN THE AUTHORITY (TO THE LIMITED EXTENT SET FORTH IN THE TRUST INDENTURE) OR A PLEDGE OF THE FULL FAITH AND CREDIT OF THE TAXING POWER OF THE STATE OF NEW JERSEY OR OF ANY POLITICAL SUBDIVISION THEREOF OTHER THAN THE AUTHORITY. . . THE AUTHORITY HAS NO TAXING POWER”.
(Public Offering Statement for $40,250,000 New Jersey Educational Facilities Authority Revenue Bonds, the Richard Stockton College of New Jersey, Series 2007G, Dated November 27, 2007.)