Despite passionate calls to add diversity to the process, the Legislature sent Gov. Phil Murphy legislation Thursday that gives a panel of four state lawmakers power to determine the fate of up to $9.9 billion in emergency borrowing.
Hours later, Murphy, a first-term Democrat, announced he signed the borrowing legislation as part of his administration’s ongoing response to the coronavirus pandemic and revenue shortfalls it has triggered.
“While this is by no means a silver bullet, the ability to responsibly borrow is essential to meeting our fiscal needs in the coming year,” Murphy said in a statement.
Some members of the governor’s own party pleaded for last-minute changes to the legislation to ensure Black and Latino lawmakers could play a role in a review process established in the law. They pointed to ongoing concerns about social-justice issues that have taken national prominence in recent weeks as they pressed for a bigger role.
However, their efforts were rejected by Democrats who control both the Senate and Assembly as the borrowing measure itself was easily approved and sent along to the governor.
Despite Murphy’s swift action, the fate of the borrowing measure will now be decided in the courts, with an outcome that’s very much uncertain. Republican lawmakers have argued the measure violates the state Constitution. The state GOP and several lawmakers said they filed suit in Superior Court in Mercer County late Thursday in a bid to block it from taking effect.
Power of four-member select committee
The legislation would establish a four-member select committee of lawmakers who would have the power to approve or reject individual borrowing proposals any time Murphy wants to use debt to finance state spending in response to the pandemic.
The measure allows for up to $2.7 billion to be borrowed through the end of September, and for up to $7.2 billion to be borrowed through the end of June 2021.
While not specified in the bill itself, Senate President Steve Sweeney (D-Gloucester) and Assembly Speaker Craig Coughlin (D-Middlesex) have indicated in recent days they will serve on the four-member panel as will the chairs of the respective budget committees in both houses. All four lawmakers are white.
Republicans have criticized their Democratic counterparts for not giving any GOP lawmakers a voice in the borrowing-review process, but it was fellow Democrats who called for Black and Latino lawmakers to be given a firm role in the review process.
“Diversity is our greatest strength,” said Sen. Ron Rice (D-Essex) during debate in the Senate.
Sen. Ron Rice: ‘Don’t take us for granted’
“Don’t take us for granted,” he went on to say. “That’s why we have people marching across this country. We are not going away.”
In her own call for minority representation, Sen. Nia Gill (D-Essex) suggested recent efforts led by high-profile Democrats to stop using the title “county freeholder” in New Jersey over concerns about racism ring hollow when Blacks and Latinos are left off key panels like the borrowing-review committee.
“The only voices in that room will be the voices that reflect their reality,” Gill said.
“You can’t talk about Black Lives Matter, and change names from freeholder to this and that, and yet not stand up when it’s time to stand up for diversity,” she added.
Before a final Senate vote on the bill, Rice made a formal motion to add two additional seats to the review panel to be filled by Black and Latino lawmakers, but his motion was tabled by other majority Democrats.
During the debate in the Assembly, a similar motion by Assemblyman Jamel Holley (D-Union) was also shot down by majority Democrats.
“I’m very concerned and leery about the representation on the committee,” Holley said. “When I saw the makeup of that committee, none of them look like me.”
“Systemic, institutional racism continues to exist when individuals who look like me, or share the values of me, are not represented,” he went on to say.
No comment on diversity concerns
Murphy, a former board member of the NAACP, could have issued a last-minute conditional veto to incorporate the diversity concerns raised by Rice, Gill and Holley. His office did not comment when asked to respond to those concerns raised by the three Democrats.
Murphy requested the power to borrow money as part of the state’s ongoing effort to manage revenue losses that his administration has been projecting as a result of the pandemic, and the reduced economic activity it has triggered.
Under a three-month stopgap budget enacted by the governor earlier this month, spending is balanced through the end of September without borrowing; the Department of Treasury projects a nearly $1 billion surplus. But some $2 billion in planned spending was deferred to balance the stopgap budget, and Murphy has projected additional revenue losses will persist into 2021.
A new budget plan is now due by Oct. 1, and the governor is by law required to deliver a spending proposal to the Legislature by August 25.
The borrowing legislation authorizes a wide range of potential options for issuing debt, including borrowing from the Federal Reserve, which created a new lending program specifically to help governments struggling to offset revenue losses triggered by the pandemic. Borrowing would have to occur before the end of the year, and repayment would be required within three years, according to the current program rules drafted by the Fed.
But the borrowing legislation also permits public- and private-debt sales, and for general-obligation bonds to be issued. It also authorizes long-term refinancing issues that could stretch out repayment as far as 35 years.
The Murphy administration has argued that language in the Constitution eases those restrictions during times of war or major emergencies. But Republicans maintain at least some remain in place even during an emergency, and they are vowing to sue to block any deficit spending attempted by the administration.
A recent opinion issued by legislative counsel for the nonpartisan Office of Legislative Services reviewed prior legal history on the borrowing issue and suggested it may be possible to borrow money during the remainder of the current fiscal year in response to the health crisis. But the opinion suggested that borrowing to fund deficit spending in FY2021 may not be allowed.
The lawsuit that Republican officials filed in Mercer County late Thursday cites the OLS opinion, and a prior borrowing case the state Supreme Court decided in 2004. The suit, filed against Murphy, seeks to have the borrowing measure declared in violation of the state Constitution.
The constitutional issues were hotly debated on the Assembly floor Thursday, with Assemblyman Jay Webber (R-Morris) referring to the oath of office that lawmakers take to uphold the state Constitution.
“The Constitution of the state of New Jersey does not allow you to do what you’re proposing to do,” Webber told majority Democrats.
But several Democrats suggested the borrowing proposal has been cleared by state Attorney General Gurbir Grewal’s office as they defended its constitutionality.
“Your party, the party of ‘no,’ is going to run to the courts,” Assemblyman John McKeon (D-Union) said to the Republicans.
It’s unclear whether Grewal has, in fact, weighed in, either verbally or in writing.
Reached by email today, Attorney General’s Office spokesman Leland Moore declined comment, saying that “as a general matter, any legal advice that the Attorney General’s Office provides to its clients, including the Governor’s Office, is subject to the attorney-client privilege.”