From replenishing New Jersey’s drained unemployment account to funding hazard pay for frontline workers, there’s been no shortage of ideas for how the state should use its remaining federal COVID-19 relief dollars.
So far, about a third of the more than $6 billion in aid New Jersey has received through the American Rescue Plan Act has been allocated by Gov. Phil Murphy and lawmakers for specific purposes, including rental assistance and financial aid for child care providers.
Murphy — a first-term Democrat facing reelection next month — has been holding a series of virtual events to collect input from various groups and individuals for how to use the balance of the federal pandemic aid.
Many have called on the governor to show more urgency and address the major issues exposed by the health crisis, such as New Jersey’s persistently high rate of unemployment.
But Murphy said last week that his administration’s primary goal is to ensure the remaining federal dollars are used to “responsibly and carefully invest in the state.”
By law, New Jersey has until the end of 2024 to obligate the balance of its federal aid, and even longer to spend it. And federal officials have made it clear they want the COVID-19 relief to sustain a long-term recovery from the still-ongoing pandemic.
Coronavirus State Fiscal Recovery Fund
In addition to funding direct stimulus payments to individuals and extending enhanced unemployment benefits, the American Rescue Plan Act also set aside $195 billion to fund the Coronavirus State Fiscal Recovery Fund.
New Jersey received its share of the state recovery funding — a sum of $6.24 billion — on May 19, according to the state Department of Treasury.
The relief funding is supposed to support the public health response to the pandemic and to lay the groundwork for a “strong and equitable” recovery from the economic downturn that was triggered by the health crisis, according to a fact sheet from the U.S. Department of Treasury.
What NJ is doing so far with its relief dollars
Murphy and state lawmakers agreed in late June to set aside about $2.4 billion of its share of the state recovery dollars for specific purposes. They earmarked $500 million for rental assistance and another $250 million to help those who’ve fallen behind on their utility bills during the pandemic.
Another $450 million is being made available to so-called Level I trauma centers in New Jersey and a $100 million child care revitalization fund has also been established using the federal dollars. The state will also spend $600 million over the next three years to fund additional special-education services using the federal relief money, according to Murphy and lawmakers.
What about the remaining funds?
With the deadline for spending all of the federal dollars still years away, Murphy and legislators agreed to some ground rules earlier this year for determining how the remaining funds can be allocated. And unlike prior tranches of federal aid, the agreement gives the Legislature’s bipartisan and bicameral Joint Budget Oversight Committee a direct role.
Under the agreement, Murphy’s administration can spend up to $200 million of the unallocated portion of the federal relief on specific purposes without the committee’s approval, as long as no single expenditure totals more than $10 million.
More than 2,000 businesses have already contacted the state Department of Labor and Workforce Development to show their interest in participating in the program, Murphy said last week.
“I look forward to seeing Return and Earn help both our small businesses and workers move forward,” he said.
Seeking more aggressive action
But many Republicans and business groups want the governor to be more aggressive in addressing lingering economic challenges brought on by the pandemic. They’ve also faulted him for not intervening already to fully blunt a statutorily required payroll tax hike for businesses that went into effect earlier this month to ensure the state’s drained unemployment fund is replenished.
Instead, Murphy signed into law earlier this year a bipartisan bill that spread out the tax hike over three years.
Meanwhile, Republican lawmakers, who are in the minority in both houses of the Legislature, say they are also drafting legislation that would allocate $200 million in federal funding to address computer-technology “areas of critical need” that were identified in a recent report from the state’s chief technology officer.
The allocation would be used to update Department of Labor and Workforce Development computer systems that faltered during the pandemic as the state was flooded with record-setting claims for jobless benefits, according to the GOP lawmakers.
“At some point soon, this work must be done, as the (report) has indicated,” said Sen. Anthony M. Bucco (R-Morris). “If we don’t act now when federal dollars are available, New Jersey taxpayers will be stuck paying for it later.”
They’ve included calls to better address New Jersey’s dearth of affordable housing, rebuild aging drinking-water infrastructure and prop up the residents of communities that have been disproportionately impacted by the pandemic.
And earlier this year, a coalition of interest groups called “For the Many” sent a letter to Murphy and legislative leaders that urged them to use the federal funds to “stabilize residents facing hardship and keep their children safe from the long-term effects of deep poverty.”
“The most straightforward way to boost household income of families who had been living paycheck to paycheck is to provide direct cash payments with no strings attached and regardless of immigration status,” the letter said.
A recent story published by The Associated Press indicated many states and big cities that have qualified for federal pandemic assistance are still deciding how to allocate their shares of the relief funding.
Recognizing that the health crisis will likely have a lasting effect on states and cities, an official from President Joe Biden’s administration told the AP that they were given a long time to spend the aid dollars specifically to ensure “a durable and equitable recovery.”
Meanwhile, in New Jersey, a recent surge in state-tax revenue and a major emergency borrowing issue gave the state enough of its own funding earlier this year to balance the budget while also addressing some long-standing fiscal problems, like the grossly underfunded public-worker pension system.
With the state’s revenue outlook less certain coming out of the pandemic, holding back some of New Jersey’s federal aid could in many ways backstop a state surplus account that right now measures roughly 5% of the more than $46 billion in total budgeted spending for the current fiscal year.
Policymakers from both parties are also likely hoping to prevent a rerun of what happened in New Jersey in the wake of the 2007-2009 Great Recession. The state’s federal stimulus aid was used in just one fiscal year, but budget gaps persisted well into subsequent years.
Have your say
The Murphy administration has established a website that is keeping a running tally of how much COVID-19 aid New Jersey has received from the federal government. The website also details how those dollars so far have been spent or allocated.
The administration has also been collecting written comments from the general public on using the remaining American Rescue Plan Act funding. They can be sent to email@example.com.