NJ State Budget 2020: Lawmakers Advance Plan to Add $7.7 Billion, Keep Government Running

[Updated: June 26, 2020] Lawmakers add money for higher ed, labor department tech problems, but keep Murphy cuts to property-tax programs; GOP members complain about rushed process
Credit: (AP Photo/Mel Evans, File)
The Senate Budget and Appropriations Committee is expected to take up the measure on Friday, with final votes in both houses planned for Monday.

Lawmakers are advancing a $7.7 billion supplemental spending bill that would fund state operations for another three months as New Jersey wrestles with the ongoing novel coronavirus pandemic.

The Legislature’s spending proposal makes modest changes to a budget plan drafted last month by the Department of Treasury after Gov. Phil Murphy and lawmakers voted to extend the current fiscal year by three months in response to the economic decline that followed lockdown orders called to stem the pandemic.

But the supplemental bill sets the stage for a series of “de-appropriations” and deferrals proposed by Treasury, which would impact everything from property-tax relief for seniors to a quarterly public-worker pension contribution that is normally made at the end of September.

“You play the hand that you’re dealt, and the cards we have are not good,” said Assemblyman Gordon Johnson (D-Bergen) as the bill was passed by the Assembly Budget Committee in a party line vote on Thursday.

Some changes to what the Murphy administration had asked for are incorporated into the Legislature’s spending bill, including more funding for four-year colleges and county colleges. Diversions from accounts that support affordable housing and promote clean energy would also be stopped under the legislative budget plan.

The spending bill, according to legislative aides, would also boost funding for the Department of Labor and Workforce Development to help address technology problems that contributed to backlogs plaguing the state’s unemployment system in recent weeks as claims for benefits have spiked during the pandemic.

The legislative proposal uses a more optimistic revenue forecast than was first proposed by the Murphy administration last month. It also plans for a larger surplus to be carried into fiscal year 2021, which will begin Oct. 1, boosting projected reserves from nearly $500 million to nearly $1 billion. In addition to allocating $7.7 billion in state funds, the spending proposal would also distribute another $4.5 billion in federal dollars.

Final votes expected Monday

The three-month period covered by the spending bill begins on July 1. That means lawmakers are now facing an important deadline to approve the proposed supplemental appropriations and send them to the governor to be enacted into law.

The first committee vote on the supplemental bill was held Thursday afternoon in the Assembly Budget Committee, just hours after the measure was formally introduced there and in the Senate.

Democrats took pains to highlight how the three-month spending bill doesn’t rely on revenue from any tax increases or new taxes. But GOP lawmakers countered the reduction in funding for property-tax relief programs will mean higher taxes for thousands of New Jersey residents, including seniors on fixed incomes.

Several Republicans on the Assembly committee also complained about the amount of time they were provided before being asked to cast votes on the 109-page spending proposal.

“We all know how important transparency is,” said Assemblyman Harold Wirths (R-Sussex).

The Senate Budget and Appropriations Committee is expected to take up the spending proposal on Friday afternoon, with final votes in both houses planned for Monday.

“This budget is not something we want to do, but it is something we have to do,” said Senate Budget and Appropriations Committee Chair Paul Sarlo (D-Bergen). “This plan will maintain support for ongoing priorities and will help address problems created directly or indirectly by the pandemic.”

Murphy stopped short of endorsing the legislative spending bill when asked about it during a media briefing in Trenton on Thursday. But he also said he’s been able to find “a good amount of common ground” on budget issues with lawmakers in both houses.

“None of us look at where we are as a fiscal matter with a lot of joy right now,” Murphy said during the briefing.

New Jersey generally operates under a July 1 to June 30 fiscal year, and, according to the state Constitution, a balanced spending bill must be enacted into law by the governor and lawmakers each year by July 1.

But this year, the deadline to pass a new fiscal-year budget was pushed back to Sept. 30 as part of a law enacted by Murphy in April that also delayed the deadline for submitting state income-tax payments, from mid-April to mid-July. Under the same law, Murphy is required to propose a spending plan for what will be a nine-month fiscal “year” 2021 by the end of August.

Murphy has been pressing lawmakers to approve an emergency borrowing proposal to help cover budget shortfalls that his administration has projected for the next 12 months as the pandemic continues to impact economic activity. The borrowing proposal has passed the Assembly, but has stalled in the Senate.

The governor also recently announced a preliminary agreement with the Communications Workers of America labor organization that promises union members will not be laid off as part of the state’s  management of budget gaps in exchange for agreements to defer raises and furlough workers. But Murphy has not released any estimates of the savings that could be generated from that deal, which is still pending ratification by union members.

Several Republicans who serve on the Senate Budget and Appropriations Committee have said it’s overly generous, and in a letter sent to Murphy on Thursday, the GOP lawmakers cited the CWA’s own message to members that promoted the preliminary agreement as it awaits ratification.

“This agreement is so weak that the CWA is advising its members, ‘By the end of the contract, you will get every raise promised. We have not given up any raises,’” the letter said.