River Crossing Strategy Group

News Item

Contact: Timothy White | Published On: Wednesday, July 1, 2020

NJ.com- The Legislature on Monday sent the governor a $7.7 billion spending plan to fund state government for three months while they assess COVID-19′s economic impact and chart a new course.

The supplemental appropriations bill has the effect of extending the state’s fiscal year through Sept. 30, a rare step taken by Gov. Phil Murphy and lawmakers during the pandemic as the unemployment ranks swelled and taxes revenues sharply dropped.

The bill heads to Murphy’s desk. It largely follows his administration’s recommendations, forgoing funding for any new initiatives and flat funding k-12 schools.

In keeping with the governor’s proposal for interim spending, the state would postpone making several big-ticket payments until the Oct. 1 budget, including a $951 million quarterly pension contribution, $467 million in public school aid, $355 million in municipal aid and $114 million in NJ Transit operating assistance.

The Legislature’s spending bill veers from the governor’s plan in a few key ways, relying on higher and more up-to-date revenue estimates. Those higher projections allowed lawmakers to restore funding for county colleges and public four-year colleges, send $4 million to the Department of Labor to modernize the unemployment system, and sock away more money into a rainy day fund.

“We have developed a three-month budget plan under crisis conditions that requires hard decisions to get us through the next stage of an extremely difficult economic recovery,” Sen. Paul Sarlo, D-Bergen, said in a statement after the vote.

“This budget is not what we want to do, but it is something we have to do to keep government operating.

But Sarlo, chairman of the budget committee, reminded senators that the temporary budget is balanced without any new taxes or borrowing.

Meanwhile, during an Assembly debate on the spending plan, Assemblyman Hal Wirths, R-Sussex, argued that no one should be congratulating themselves for going “three months without increasing taxes.”

Republicans in the Senate and Assembly voting against the budget bill slammed the governor for disregarding the Legislature’s cost-saving proposals, including a massive partial furlough program for state and local workers. “So after many of our suggestions have been ignored, we find ourselves boxed into a corner and expected to go along, or otherwise we’re considered not to be cooperating,” said Sen. Steven Oroho, R-Sussex.

The supplemental appropriations bill also authorizes Murphy to cut more than $1 billion in spending this year, including money for property tax relief, to close a projected $2.8 billion revenue shortfall. According to the bill, the Legislature’s Joint Budget Oversight Committee will receive a list of potential “deappropriations” and will have five days to raise any objections.

Once the stopgap budget is enacted, Murphy and the Legislature will have until Oct. 1 to pass a new budget, with potentially billions of dollars in revenue losses. Senate President Stephen Sweeney, D-Gloucester, has said he expects the Legislature and administration to turn their attention quickly to the fall budget and work throughout the summer.

Murphy has called for billions in borrowing and is calling on the federal government to come through with more aid to help offset reduced tax collections.