Gov. Phil Murphy now has a stopgap budget that spends $7.7 billion between now and the end of September to ensure the state can operate after tax collections dropped and unemployment soared.
The spending bill easily cleared both houses of the Legislature on Monday as lawmakers returned to the State House for in-person voting for the first time since the onset of the novel coronavirus pandemic.
But it still requires the governor’s signature to be enacted into law, and that action would have to come before Wednesday to make sure there are no gaps in funding that could interrupt state operations.
The governor’s office did not respond to a request for comment on Monday. But Murphy, a first-term Democrat, has not raised any objections to the spending bill as it moved through the Legislature in recent days, and he’s widely expected to sign it.
The stopgap budget covers July, August and September and it largely reflects what the governor proposed last month after moving the start of the state’s fiscal year from July 1 to Oct. 1. That move bought Murphy and lawmakers time to deal with the economic fallout brought on by a series of lockdown orders to halt the spread of COVID-19.
Murphy’s administration has projected total revenues will fall to around $34 billion over the next 12 months due to the pandemic and the ongoing economic restrictions. The budget that was passed in June 2019 totaled $38.7 billion.
More money for higher ed, Dept. of Labor
The spending bill, drafted by lawmakers last week, is slightly larger than a three-month plan proposed by the Department of Treasury last month. It increases funding for four-year public colleges and universities by $52.5 million, and for county colleges by $13.3 million. Nearly $4 million will also go to the Department of Labor and Workforce Development to help address technology problems that have slowed the distribution of unemployment benefits in recent months.
Murphy for now has shelved his calls for tax hikes, and the three-month stopgap budget does not rely on any revenue from new or increased taxes, something majority Democrats touted on Monday as the spending bill cleared both houses.
However, some Republicans noted that among a series of proposed cuts and deferrals is funding for property-tax relief programs, resulting in de facto tax hikes for thousands of New Jersey residents, including seniors and the disabled. Several GOP lawmakers also took shots at Murphy for agreeing to a deal with the Communications Workers of America labor organization that calls for worker furloughs and a deferral of some wage hikes in exchange for a pledge not to lay off any workers in response to the state’s ongoing fiscal problems.
Murphy touted that agreement — which was ratified in recent days by union members — in a statement issued to reporters on Monday. He said the union givebacks could save taxpayers “over $100 million,” but he did not provide a detailed breakdown to support that estimate.
“I would like to thank the CWA leadership and members for their willingness to negotiate in good faith with the state,” Murphy said. “Together, we have reached the best possible outcome for our state, our workers, and our taxpayers.”
No word on emergency borrowing
The stopgap budget doesn’t use any funding from an emergency borrowing measure Murphy has been pressing lawmakers to pass to help offset projected revenue losses. The borrowing legislation sought by Murphy cleared the Assembly earlier this month, but it has been stalled for weeks in the Senate.
The measure would allow for at least $5 billion in state general obligation bonds to be issued as part of the state’s response to the pandemic. The bill also authorizes refinancing of short-term debt to stretch out repayment as far as 35 years. It would also allow for an increase in the sales tax along with statewide property-tax assessments in the event the debt service on the bonds cannot be repaid with general budget revenues.
During a conference call with reporters on Monday, Senate President Steve Sweeney (D-Gloucester) suggested several concerns — which have stalled the borrowing legislation in his chamber — may be close to being worked out with Murphy. Sweeney said negotiations are ongoing and suggested his house could move quickly to get the measure adopted this week if Murphy signs off on requested changes.
“We’re talking, and we’re having (productive) talks,” Sweeney said.
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.