New Jersey officials yesterday said they hope to issue $1.6 billion in refunding bonds next week, deferring more than $900 million of debt service scheduled to come due over the next three years.

In a presentation to the state Legislature's Joint Budget Oversight Committee, Treasury officials said the deal will be negotiated and include both advance refunding and current refunding components. Present-value savings to the state would be almost $24 million.

Robert Lurie, New Jersey's director of public finance, said the state would like to price the deal before Christmas week. For that reason, he said the Legislature must act within the next day or two in order to allow enough time for an official statement to be prepared for the deal.

Although time is of the essence, the Legislature yesterday gave no indication it would be rushed. The budget committee recessed without giving its approval, but could still decide the issue today or tomorrow, Lurie said.

In addition to the committee approval, a bill lawmakers must approve for one portion of the refunding is still under consideration by the full Legislature. The bill would eliminate a restriction forbidding New Jersey from refunding previously refunded debt.

If New Jersey is unable to complete the deal by the end of the year, about $100 million in debt service will come due that state officials were hoping to defer to later years.

State Treasury officials also told the Legislature yesterday they hope to include detachable call options on a portion of the deal. The options sell the right to call the bonds, effectively creating noncallable debt for the state.

Lurie said that idea was proposed by First Boston Corp., and the firm would probably underwrite the product if the state decides to go ahead with it. He said it is too soon to know how large that portion of the refinancing would be.

The proposal sent to the Legislature yesterday recommends the $900 million in debt service deferments generated over the next three years be used to fund a budget surplus and rainy-day fund, as well as new construction and renovation projects.

The recommendation proposes using $235 million of the total to create a budget surplus in the current fiscal year. The existing surplus is estimated at only about $30 million, a level Gov. Jim Florio has said is nearly $250 million short of adequately meeting the state's needs.

"We would hope the surplus would be retained as a surplus into fiscal 1994," Lurie said.

Of the remaining $900 million, the Treasury proposed using about $270 million for capital construction projects and $50 million for a rainy-day fund in both fiscal 1994 and fiscal 1995.

Although New Jersey faces a $1.7 billion shortfall in next year's budget, Treasurer Samuel Crane said the deferred debt service should not be used to plug the hole. Treasury officials say a large piece of the deficit might vanish anyway if a recovery takes hold next year and boosts projected tax collections.

Rating agency officials said they are still reviewing the details of the state's plans and would issue comments later in the week.

But Lurie said their concerns center on how New Jersey plans to use the deferred debt service and how the problems with next year's budget will be resolved.

He said the plan to build reserves and fund long-term construction projects showed the state was using the refunding opportunity responsibly. On the question of next year's budget shortfall, Lurie said state officials and lawmakers are still discussing ways to address the problem.

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