Gov. Phil Murphy is set to make a routine speech Tuesday to mark what was anything but a routine year.
This year’s State of the State address comes as the COVID-19 pandemic continues to exact a deadly toll and as the state’s economy is anything but certain. In the speech, Murphy is expected to talk largely about the prospects for the economy in the coming year. The address will also serve as the backdrop for a personal Murphy milestone: his reelection bid.
Although for nearly all of 2020, the focus was on the COVID-19 pandemic, New Jersey’s state government worked on other issues as varied as trying to legalizing marijuana to bolstering the power grid to supporting green energy initiatives. Ahead of the State of the State speech, NJ Spotlight News looks at how the Murphy administration fared in key areas and how it is positioning itself to proceed in 2021.
While Murphy made legalizing recreational marijuana use among adults a central pillar in his 2017 gubernatorial campaign, getting this done has proved to be a continuing challenge. Legislative efforts to set up a legal market here — following the early lead of states like Colorado — hinted at millions in new tax revenue, but the process became more complex as lawmakers began to consider the details and how they could address a long history of racist drug policy enforcement. When the package of bills stalled, lawmakers kicked it to voters, who agreed in November by a 2-1 margin that, come January 2021, cannabis should be legally available for sale to anyone over 21. Despite that mandate and years of discussion, lawmakers have yet to agree to a regulatory framework, clashing over details related to tax deductions, penalties for teens caught with pot, and magic mushrooms, among other things.
“I’m still optimistic we’re going to figure something out,” Murphy said Monday, days after he objected to the details of the latest final version of the bill lawmakers had approved. There is widespread agreement on the key principles, he said, including preventing “more kids (from) getting tangled up in the criminal justice system” while providing adults a legal path to obtain cannabis. “We’ve somehow got to thread a needle and get both of these things accomplished,” Murphy said.
Regardless of the legalization battle, Murphy has continued to greatly overhaul and expand the state’s medical marijuana program, making it easier to qualify, enroll for and afford this medicine. When he took office the program, begrudgingly initiated by former Gov. Chris Christie, involved fewer than 18,000 patients, a few hundred prescribing doctors and five dispensaries. As of late November, when the state Department of Health issued a permit to the state’s 13th medical marijuana store, the initiative includes 97,500 patients and 1,250 physicians.
Health insurance: Get Covered NJ
After years of patchwork state policies to fix holes ripped in the Affordable Care Act by Republicans in Washington, the Murphy administration — with help from Democratic allies in the state Legislature — took a major step last year to reclaim control of the public health care program by taking over the insurance marketplace, or exchange. The state-based exchange, Get Covered NJ, enables New Jerseyans who don’t have insurance through work and earn too much to qualify for Medicaid to purchase high-quality commercial health plans. Sales for 2021 coverage began Nov. 1 and will continue through Jan. 31.
Previously, the nearly 300,000 consumers purchased plans through the federal healthcare.gov site. By taking over this operation, New Jersey has been able to expand by hundreds of dollars a year the subsidies available from the federal government to help consumers — eight in 10 consumers in the market qualified for benefits last year, according to state officials; they say New Jersey has enhanced its outreach and the support available to help shoppers enroll and keep open the market for longer. Because of the larger subsidies, average prices are the lowest they’ve been in years for some products, the state said. As of Dec. 5, more than 226,700 people had signed up, officials said, including 20,000 new customers.
When he took office, Murphy pledged to reshape how New Jersey responds to what was considered the opioid epidemic, a rising tide of illegally-used prescription pills, heroin and the synthetic opiate fentanyl that took the lives of some 3,000 state residents a year. While (former Gov. Chris) Christie had played a prominent role in his administration’s efforts, Murphy diverted funds from advertising contracts and chose instead to invest in proven clinical treatment programs and social services designed to help people avoid addiction altogether.
During the COVID-19 pandemic, the logistics of treatment programs changed drastically. The state Department of Human Services, which oversees addiction services, worked to help providers adapt and it tweaked Medicaid to ensure patients would still be covered for sessions held by phone or video link. The DHS has also used at least $25 million in federal funds to help these programs cover new expenses — like infection-control — and has worked with law enforcement, drugstores and other entities to distribute thousands of doses of naloxone, the overdose reversal agent critical in saving lives.
The need for these services appears to be growing. Based on overdose data from the first half of 2020 — overdoses are up 17 % over last year — drug-related deaths could have reached a new record of nearly 3,200 by the end of December. The state has not posted normal monthly updates since September.
About five weeks into the COVID-19 pandemic, with the virus spreading quickly through New Jersey’s correctional facilities, Murphy announced a plan to temporarily furlough nonviolent offenders quickly. But it took months and a Supreme Court case to get the administration to provide an accounting of releases; advocates panned the number of releases — about 400 as of June 1 — particularly given the state had the highest rate of prison COVID-19 deaths in the nation at that time. It wasn’t until Murphy signed a compassionate release bill lawmakers sent him that large numbers of inmates were released — about 2,300 — with their release coming the day after the general election.
New Jersey’s debt grade was downgraded by two different major Wall Street credit-rating firms in 2020 as the coronavirus pandemic brought on unforeseen revenue losses that firmly tested the state’s fiscal stability. The first downgrade came in April from Fitch Ratings, which lowered the state’s general-obligation debt grade by one step, from “A” to “A-.” In November, S&P Global Ratings announced a one-step general-obligation debt-grade reduction, from “A-” to “BBB+.” The S&P downgrade marked the first time ever the state’s credit rating had tumbled into “BBB+” territory or an equivalent rating. A state’s credit rating is a key factor for investors, and downgrades often lead to higher borrowing costs that ultimately are passed along to taxpayers whenever the state has to issue long-term bonds.
After starting the year at 4%, New Jersey’s unemployment rate soared to more than 10% during the final months of 2020 as the state was hit by a second wave of the pandemic. While state labor officials reported nearly 60% of the jobs that were lost during the first wave of the health crisis had been recovered by November, New Jersey’s unemployment rate remained well above the federal jobless average, which was less than 7% that same month. Meanwhile, nearly 80% of the businesses that responded to the New Jersey Business & Industry Association’s annual business outlook survey in 2020 reported decreased earnings over the first eight months of the year. But many low-wage workers received a boost in pay on Jan. 1, 2021 when the state’s hourly minimum wage was increased by $1 to $12 under an ongoing ramp-up that was established in a 2019 law.
Murphy administration officials reported in early 2020 that the average New Jersey property-tax bill had increased by nearly $200, to a record-high $8,953. The year-over-year increase was slightly above 2%, marking the first time the average property-tax bill rose by more than 2% since 2016. Later in 2020, the Murphy administration temporarily froze funding for the state’s popular Homestead property-tax relief program to help ease the budget woes triggered by the pandemic. That left thousands of seniors, people with disabilities and other homeowners who receive Homestead credits without any property-tax relief last year. Murphy and lawmakers enacted a new state budget in late September that renewed the Homestead program for 2021. But budget language also continued the practice of shortchanging those relief credits by calculating benefits as a percentage of property-tax bills levied over a decade ago when the average bill was significantly lower.
Clean energy, transportation
Murphy faces tough decisions as officials try to resolve issues that could derail key aspects of his administration’s ambitious goal of transitioning to 100% clean energy by mid-century. For instance, by the end of 2021, the state’s clean-energy goals call for development of 600 megawatts of energy storage, a target it will not come close to achieving. With an Energy Master Plan relying on most of the state’s electricity projected to come from intermittent sources of renewable energy like solar and offshore wind, energy storage is critical to maintaining a reliable power grid.
The state has initiated several programs to incent drivers to switch to electric vehicles, including a popular rebate to help offset the purchase of vehicles. But New Jersey balked last month at joining the regional Transportation & Climate Initiative that would finance other clean-vehicle programs by raising gasoline taxes by at least a nickel per gallon. A decision about if and when New Jersey decides to join the program among Northeastern states is unlikely to be made before the November gubernatorial election.
Last week, the state announced it would launch a new proceeding to come up with subsidies to incent solar developers to keep investing in and building new systems in New Jersey. It is likely to be a highly contested process given legislative directives to cut costs to ratepayers, who end up subsidizing much of those costs. And the Board of Public Utilities must decide this spring whether to retain $300 million in annual subsidies from utility customers to keep nuclear plants open in South Jersey. Public Service Enterprise Group, the operator of the plants, has said it may close them if the subsidies are not maintained.
Murphy made a big push for ethics reform at the start of 2020, devoting a significant part of his State of the State message to it. Among other provisions, a five-bill package sought to eliminate from the state’s Open Public Meetings Act the exclusion that the Legislature enjoys for all communications and memos related to lawmakers’ official duties, prohibit legislators and staff from accepting gifts related to their public duties and prevent a legislative vote on any bill unless its final form has been publicly available on the state website for at least 72 hours. The measures went nowhere.
The governor made significant strides in criminal justice and police reform. He signed into law a number of reform bills, including measures to require most police to wear body cameras, with the state picking up the tab. As they year was winding down, his state attorney general issued significant new guidelines governing law enforcement’s use of physical force; it prohibits all forms of force against a civilian except as a last resort and only after the officer uses other means to de-escalate a situation.
The governor’s office finally seemed to develop a productive working relationship with Democratic legislative leaders in 2020. That may have been helped by the pandemic, with the Legislature quickly passing a package of emergency relief bills just weeks after the state’s first case of COVID-19 on March 4. As the year wore on, there were fewer complaints from lawmakers about Murphy arbitrarily vetoing bills without warning and there appeared to be an overall more positive relationship, particularly with Sen. President Steve Sweeney (D-Gloucester).
Shortly before the end of 2020, the Murphy administration announced an award of almost $5.7 million to a Bergen County nonprofit to build 25 new affordable rental units. What made this remarkable was that it was the first award by any administration from the state’s Affordable Housing Trust Fund in years. Murphy stopped diverting all the fees earmarked for the fund in the 2020 fiscal year budget for the first time in years. Yet it took until almost halfway through the 2021 fiscal year to spend any of that money, about $60 million. Housing advocates blamed the delay on the pandemic and praised Murphy for the renewed financial support for affordable housing.
Education: More than one challenge
During the last 10 months, the governor largely passed the decision of remote or in-person instruction to individual districts, a strategy that drew both fans and critics. But in doing so, his administration also left thousands of students — even tens of thousands — without the necessary technology for remote instruction, and questions mount over how much time these students have lost. Post-COVID-19, the administration will be charged with helping to guide districts back to in-person instruction, while facing the same questions over what that will look like and how much will be left to districts to decide.
The pandemic also has paused state testing of students, but Murphy will soon have to decide next steps for testing this spring and beyond. On Monday, he issued a directive to suspend the state’s required exit exam for graduation, but he will face pressure to scale it back permanently, although that would also require an act of the Legislature.
The state also faces major education-related court challenges, a couple of which could be decided in 2021 and add to the pressures on the Murphy administration. The most immediate is a likely challenge over the state’s failure to keep up with its obligations under Abbott v. Burke to provide adequate school buildings for 31 needy districts. Other cases involve challenges to the spread of charter schools and the long-standing racial segregation in the state’s public schools.
And in February, Murphy will present his budget for the 2022 fiscal year, a third of which is state aid to local public schools. A year after holding them to mostly level funding during the first wave of the pandemic, he will face pressure to bring them back more closely to the state’s school funding formula in this budget.
— Tom Johnson, John Mooney, Colleen O’Dea, John Reitmeyer and Lilo H. Stainton contributed to this story.