A breakdown of NJ’s $920M in frozen spending

Daniel J. Munoz//March 27, 2020//

A breakdown of NJ’s $920M in frozen spending

Daniel J. Munoz//March 27, 2020//

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On Monday, the state treasury announced it is freezing $920 million in state spending through June 30, as the COVID-19 pandemic blows holes in the budget and leads to potentially “significant” nosedives in state tax revenue.

Residents and businesses across New Jersey are bound to feel some kind of pain based on this move alone. The full list, published on March 25 and dated two days earlier, details hundreds of programs across state government that will be locked and placed in reserve for the near future.

New Jersey Treasurer Elizabeth Maher Muoio answers questions after giving her report to the NJ Senate Budget and Appropriations Committee meeting on May 14, 2019.
New Jersey Treasurer Elizabeth Maher Muoio. – AARON HOUSTON

The Monday move was in response to potential “precipitous” drops in state tax revenue across the board, said State Treasury Elizabeth Maher Muoio.

Under state law, New Jersey is not allowed to run a deficit—meaning that all programs Murphy approves require a funding source.

The largest freeze will be $142 million to the Homestead Rebate property tax relief program. That could be particularly troublesome for hundreds of thousands of residents who will not have the tax break available when they file property taxes on May 1.

Nearly $71 million in aid to colleges will be frozen, including almost $30 million for the statewide Rutgers University system – $20.3 million of which would have gone to the Rutgers School of Biomedical and Health Sciences. Montclair State University will have $7.1 million in state aid frozen, while Kean College will see $4.1 million frozen, Rowan University $7.2 million, and the Cancer Institute of New Jersey $1 million.

The state is also freezing $1 million that would go toward the Civic Information Consortium, which is meant to help prop up hyper-local journalism across New Jersey.

Another $45 million in local aid programs will be frozen, including $23.8 million to transitional aid, which is given to the poorest municipalities with little property tax revenue to self-finance operations.

The state will also freeze $32 million in New Jersey Economic Development Authority Grant programs. That includes $28.5 million from the Economic Redevelopment and Growth program, an incentive that provides gap-financing for businesses looking to build residential – and in some cases commercial – projects in New Jersey. State law requires incentive dollars to be paid out annually to companies if they certify they created an agreed-upon number of jobs, and generated a set amount of economic activity, such as capital investment.

While the NJEDA has slow-walked tax break payments as it subjects participating companies to greater scrutiny, the Murphy administration repeatedly maintains that those slowdowns are by no means payment freezes.

Another $5 million will be frozen to the Cooper Medical School’s hospital support. A similar move last year, following Murphy’s enactment of the 2020 budget, drew out accusations that Murphy was attempting to politically twist the arms of one of his biggest foes, George Norcross, who chairs Cooper University Health Care’s board.

Norcross is a close friend of Senate President Stephen Sweeney, D-3rd District, who has many times butted heads with the governor.

The state treasury is also freezing $21 million, including $20 million toward his championed community college tuition state subsidy program, which covers the entire costs for thousands of residents to receive two-year degrees at state schools.

Another $13.8 million toward opioid addiction treatment programs is being frozen, as is $1.3 million toward the operation of the state’s medical marijuana program.

“The impact of COVID-19 on the state, its economy, and budget and finances is unpredictable and rapidly changing, but the state believes that events surrounding COVID-19 will negatively impact the state’s economy and financial condition,” Muoio said on Monday.