by Cezary Podkul, ProPublica
When state Treasurer Andrew Sidamon-Eristoff briefed lawmakers on New Jersey’s ailing budget in April, he brought good news. His office had just raised a welcome $92 million thanks to a deal that bailed out two bond issues headed for default.
New Jersey had no legal obligation to make good on the debts, which were backed by payments from a national settlement with the nation’s leading tobacco companies. But Sidamon-Eristoff said the bailout was a “no brainer” because it protected the state’s reputation with lenders and raised badly needed cash.
An examination of this transaction by ProPublica shows that the argument for the deal was far from clear cut. As it bailed out bond investors, New Jersey traded away an estimated $400 million in future tobacco revenues that would have flowed into state coffers starting in 2017. Read the entire story.