N.J. Supreme Court upholds appropriations-backed debt.

• Position: News & Numbers

The New Jersey Supreme Court voted 4-3 in April to reject a broad-based challenge to state statutes authorizing state authorities to issue appropriations-backed debt without voter approval. The decision came as a relief to the state, whose $19 billion of outstanding debt includes $12 billion of appropriation-backed debt, according to The Bond Buyer.

"The court has issued a well reasoned and clear opinion on appropriations-backed debt issued by the state," State Treasurer John E. McCormac said in a statement. "We are gratified that debt issuance policy historically observed by the state has been upheld. We also recognize the state's perpetual obligation to exercise due discretion and fiscal restraint in all public finance decisions."

Appropriations-backed debt, or contract debt, differs from general obligation debt in that it is subject to annual appropriations and is not a legal obligation of the state. As a practical matter, however the state could not default on this type of debt without jeopardizing its credit...