The state Legislature’s top Republican lawmakers are floating a plan for how they want the Murphy administration to spend the $6.4 billion it’s getting from the Biden team under the American Rescue Plan.
Lawmakers on both sides of the aisle have shown an increasing desire for more input on how Gov. Phil Murphy’s team spends the federal COVID-19 relief money, arguing that the input was lacking with the Trump-era funds.
As of Feb. 28, the state spent nearly $1.97 of the $2.4 billion it got under the Coronavirus Aid, Relief and Economic Security Act, according to state auditor David Kaschak. That’s part of $7.9 billion in federal aid that’s gone to the state either directly or to public agencies like mass transit, local governments or universities.
Both parties argued that they did not have anywhere near enough input on where those funds went and that it was done entirely by the administration.
“New Jersey will soon be swimming in cash from the federal government and I want to make sure those funds are dedicated to helping our taxpayers and the unemployed,” Assembly Republican Jon Bramnick, R-21st District, said April 8 in a statement.
The presence of federal aid, plus more than $4 billion in new debt and soaring consumer demand, mean the state is flush with billions of dollars more in cash, defying expectations that the COVID-19 business shutdowns would crash the economy and state finances.
During an April 6 budget hearing, Senate Budget Chair Paul Sarlo, D-36th District, pressed New Jersey State Treasurer Elizabeth Maher Muoio on whether “we have commitments from you that your administration will work with the Legislature” on how to spend the money, something which the administration said it very much favors.
To that end, Murphy is in the midst of approving $100 million of grants for COVID-hit businesses, paid for with funds from the CARES Act. The $6.4 billion is not included in Murphy’s $44.8 billion spending plan, which covers expenses between July 1, 2021 and June 30, 2022.
“Any decision on how to spend American Rescue Plan funds will be contingent on upcoming guidance from the US Treasury Department,” said Alyana Alfaro, press secretary for the governor’s office.
The Senate GOP caucus said it wants the Murphy team to spend $2.5 billion over three years on bolstering the state’s unemployment fund. Of that, $1 billion would go toward paying off any debt that the state took on in order to finance state-run jobless benefits before any interest accrues.
Another $1.5 billion would go toward refilling the state unemployment system and staving off employer tax increases that would typically finance the years-long replenishment.
Half a billion dollars would go toward upgrades to the state unemployment system’s “antiquated computer systems, and for IT upgrades with the state Motor Vehicle Commission.”
The plan calls for $1.5 billion over three years for long-term capital projects for “state, public and private schools, institutions of higher educations, local governments, libraries” and other public agencies, so that the state would not accrue more debt.
Another $1 billion would go toward COVID-relief aid for pandemic-hit businesses and nonprofits, half a billion dollars for mortgage and rental assistance programs, and another $500 million toward staving off any cuts in state aid to New Jersey’s K-12 school districts.
“Our plan puts the [$6.4 billion] of federal funds to use in a responsible way that will help New Jersey overcome the challenges of the pandemic,” Sen. Steven Oroho, R-24th District, the top Senate Republican budget lawmaker, said on April 8. “If we don’t undertake those costly upgrades now when we have the money, they’re unlikely to happen any time soon.”
The plan does not include any mention of using funds to pay down any of the state’s older, higher-interest debt – something floated by Murphy and backed by several key figures in the state’s business community.
Sarlo backed a similar proposal, and on April 6 said that “it’s incumbent upon us to work with this administration… to pay down debt and… make sure that we make these investments strategically… that we plan for the next two or three fiscal years.”
Editor’s note: This story was updated at 4:45 p.m. EST on April 9, 2021 to include comments from the governor’s office.