Gov. Murphy’s lieutenant backs housing fund diversion

As a candidate, Murphy promised to end raids on an affordable-housing trust fund. His proposed budget would take $20 million
Credit: (Edwin J. Torres/ Governor’s Office; CC BY-NC 2.0)
New Jersey Lt. Gov. Sheila Oliver

Lt. Gov. Sheila Oliver is defending the administration’s plan to use $20 million that is supposed to be dedicated to supporting New Jersey’s Affordable Housing Trust Fund to instead underwrite another housing-related effort.

Speaking during a legislative budget hearing Monday, Oliver said the $20 million will prop up a first-time homebuyers’ program and help address broader concerns about the uneven distribution of wealth in New Jersey — or what is generally referred to as income inequality.

“A lot of us feel that this is an important public policy issue,” Oliver told members of the Assembly Budget Committee who asked questions about the proposed fund transfer.

“It is our belief that giving families access to home ownership is one way to begin to change the trajectory of narrowing down that wealth gap,” she said.

The discussion of the use of the state’s affordable housing funds came as lawmakers review Gov. Phil Murphy’s budget proposal for the fiscal year that begins on July 1.

Oliver appeared before the budget committee as the commissioner of the state Department of Community Affairs, an agency that she was picked to lead after she and Murphy, both Democrats, were elected as a slate in 2017. They are now both up for reelection this year.

During the hearing, members of the budget committee also dug into issues related to rental assistance for New Jersey residents who’ve been hit hard by the coronavirus pandemic, the current level of state aid for municipalities, and the state’s ongoing oversight of Atlantic City’s municipal finances.

READ: Concern over Murphy’s plan to divert $20M of affordable housing funds

WATCH: Assessing the impact of Gov. Murphy’s proposed budget in an election year

Last week, state Treasurer Elizabeth Maher Muoio appeared before lawmakers to detail Murphy’s $44.8 billion budget plan, which calls for no new taxes but would also draw down reserves to help support record spending. This week, lawmakers are continuing to hold hearings with Oliver and other individual department heads.

After this story was published, Murphy press secretary Alyana Alfaro Post disputed the characterization that any funds were being “diverted” or “raided” from the trust fund by the Murphy administration. She said state statute allows trust fund money to be used, at the discretion of the commissioner, to advance the department’s “housing policy objectives.” She also said the down payment assistance program largely benefits those making less than the program’s 140% of median income threshold.

How will Murphy administration spend the money?

During Monday’s discussion of affordable housing concerns, lawmakers wanted to know exactly how the Murphy administration plans to use funding from the state’s realty transfer tax, which is meant to be dedicated to the trust fund that subsidizes efforts to build or support homes for those with no more than 80% of an area’s median income.

An NJ Spotlight News story last month highlighted how Murphy’s budget has proposed using $20 million in supposedly dedicated affordable housing funds to support the New Jersey Housing and Mortgage Finance Agency’s Down Payment Assistance program. That program assists prospective homebuyers with no more than 140% of an area’s median income — a significantly higher income limit than is allowed under the trust fund.

While raising concerns about the proposed trust fund transfer, state affordable housing advocates have argued the dedicated revenue should instead be used only to help lower-income residents secure affordable housing in New Jersey, which has a reputation for being a high-cost state, including for housing.

According to budget documents, the proposed fund transfer would be carried out using language inserted in the annual spending bill that allows the governor and the Legislature to maintain a balanced budget and circumvent statutory revenue dedications.

Defending the diversion

In her defense of the proposed transfer, Oliver said supporting first-time homebuyers in New Jersey could generate “intergenerational upward mobility.” She also said it could help lift people out of a cycle of living in government-subsidized rental housing.

“I believe that home ownership can change that dynamic and change the paradigm,” Oliver said.

“Why would we perpetuate keeping people in subsidized housing when we can have them be homeowners? And then I think it creates an aspiration, and it creates a motivation, for children who are raised in an environment in which their family owned that property to become property owners themselves,” she added.

Concerns about housing trust fund diversions go back over a decade. Former Democratic Gov. Jon Corzine first proposed using some of the fund’s resources for rental housing assistance, rather than new construction, in 2008. Republican Gov. Chris Christie continued the diversions throughout his eight-year tenure.

During his first campaign, Murphy vowed to end the practice. In his first year in office, however, Murphy, along with Democrats who control the Legislature, enacted a budget that diverted all of the trust-fund money. It wasn’t until 2019 that he put all of the money from realty transfer fees earmarked for the Affordable Housing Trust Fund into the fund.

Where does that leave affordable housing?

Pressed on whether the latest proposed fund transfer would hamper the ongoing efforts to support affordable housing in the state, Oliver on Monday pointed to over 22,000 units that she said were created in New Jersey last year amid the ongoing pandemic. She also said a hot real estate market in New Jersey is lifting year-over-year revenues from the realty transfer tax.

“I do not feel that $20 million from the Affordable Housing Trust Fund is going to lessen to any degree the ability to provide affordable housing units in New Jersey,” Oliver said.

“That is my thinking in that regard. I think it is the thinking of a lot of social-justice organizations,” she said. “We have to change the economic opportunity that is provided to people.”

READ: State starts to apportion all $60M affordable-housing funds in 2020 budget

READ: Despite campaign promises, Murphy plans to raid affordable-housing fund

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