A plan to help state and local governments save millions of dollars by partially furloughing some of their workers during the coronavirus pandemic has easily cleared its first legislative hurdle.
The key to the bipartisan legislation sponsored by Senate President Steve Sweeney (D-Gloucester) and two other lawmakers is expanded unemployment benefits, which are being funded by the federal government in response to the economic upheaval caused by the pandemic.
For many workers, the supersized benefits would allow them to collect the same or better pay even as they miss time at work, with the federal government picking up a large share of the tab. And since New Jersey taxpayers generally pay more to the federal government than the state receives back in federal funding, the sponsors say it offers the state a rare opportunity to buck that trend.
Members of the Senate Budget and Appropriations Committee passed the legislation unanimously on Thursday, generating support from both labor and business groups during a hearing held using videoconferencing software because of the pandemic.
Sweeney called the bill the “ultimate win-win” in a statement issued after the hearing ended, and it is now on course to go before the full Senate next week. But it remains to be seen whether Gov. Phil Murphy will eventually sign on, especially as the state unemployment system is already being crushed with new benefits claims as the pandemic has continued into May.
Will Murphy sign on?
Murphy, a first-term Democrat, didn’t shoot down the idea of doing furloughs during a coronavirus media briefing held in Trenton on Thursday. But he also didn’t offer an endorsement, as he said the pandemic has only heightened the importance of the services many public workers provide in New Jersey.
“On furloughing, I would just say this: As a conceptual matter, it’s something that we’re open to,” Murphy said.
New Jersey has been among the states that have been hit the hardest by the pandemic, with over 133,000 positive COVID-19 cases reported, and more than 8,800 deaths.
But COVID-19 has also taken a huge bite out of the state economy, as strict social-distancing measures Murphy ordered to slow the spread of the disease have led to the closure of many businesses deemed “nonessential.”
More than 640,000 New Jersey residents are now receiving unemployment benefits statewide as of the beginning of the month, according to the latest figures released on Thursday by the state Department of Labor and Workforce Development. Nearly $2 billion in assistance has also been paid out since mid-March, as more than 1 million claims for unemployment benefits have been filed.
Local governments laying off workers
The state is also forecasting billions of dollars in lost revenue, according to preliminary projections obtained by NJ Spotlight, and many local governments have begun to lay off workers or take other cost-saving measures to offset their own pandemic-related revenue losses.
Sweeney and co-sponsors Nellie Pou (D-Passaic) and Steve Oroho (R-Sussex) have estimated their partial furlough bill could save as much as $750 million spread across state, local and county governments in New Jersey.
Their plan takes advantage of the $2 trillion federal Coronavirus Aid, Relief and Economic Security (CARES) Act passed in response to the pandemic, including a provision that is funding expanded weekly unemployment benefits totaling $600 for each out-of-work employee, through the end of July.
The sponsors’ savings estimates are based on an assumption that 100,000 out of the 400,000 workers employed by state, local and county governments in New Jersey at various pay grades will end up being furloughed for three days each week over a three-month period. They also project that any worker making $89,000 or less in annual salary would be kept whole or even make out better, even as they miss time at work, due to the enhanced federal benefits.
A state job-sharing law that was enacted in 2011 also already allows for public or private employees to still receive full benefits even as they participate in an approved job-sharing furlough program, and language in the bill also would maintain seniority rights and pension time for furloughed workers.
Murphy has repeatedly said New Jersey’s revenue losses could eventually bring on layoffs if the state doesn’t receive more robust federal aid, but Pou and Oroho both suggested the furlough measure could save jobs while also saving money, especially for county and local levels of government.
“We should do everything we can to put more money in the pockets of New Jerseyans today so they will have more money to spend to recharge our economy when the coronavirus crisis ends,” Pou said.
“Every day we delay costs us money,” Oroho said.
Support from teachers’ union, business leaders
Among those offering praise for the legislation during Thursday’s committee hearing was Francine Pfeffer, associate director of government relations for the New Jersey Education Association, the state’s largest teachers’ union. She said ensuring that any job-sharing furlough decision is made “between the union and the employer” was a key concern.
“We do support this bill,” Pfeffer said.
Also testifying in support was Christopher Emigholz, vice president of government affairs for the New Jersey Business & Industry Association. He said NJBIA had concerns about an earlier draft of the legislation, including a family-leave provision, but the amended version would “help our state budget going forward.”
“We appreciate the Senate president’s effort on this,” Emigholz said.
The bill is tentatively scheduled to go before the full Senate during a voting session that’s scheduled for Thursday.