With a June 30 deadline looming, lawmakers are fast-tracking a $7.7 billion emergency budget to cover costs for another three months, as the state grapples with the ongoing COVID-19 pandemic and ensuing economic recession.

The Assembly Budget Committee approved the spending plan known as Assembly Bill 3 along party lines, with support by the Democratic majority, at its June 25 remotely held voting session.

The measure will be heard on Friday at the Senate Budget and Appropriations Committee, followed by full-floor votes this Monday at the first in-person Assembly and Senate voting sessions in months.

Gov. Phil Murphy will have to decide whether to enact the three-month spending plan to hold the state over from July 1 to Sept. 30, which is the end of the extended budget year.

Typically, the budget runs from June 30 to July 1, but the state income and corporate business tax filing deadline was pushed back from April 15 to July 15 in 2020, in line with announced changes from the Internal Revenue Service.

Murphy did not comment on the $7.7 billion spending plan when asked about it at a press conference earlier Thursday at the Trenton War Memorial.

“I think we’ve got a good amount of common ground and working relations with both the Assembly and the Senate on the stopgap budget,” he said.

Responses to the pandemic by Murphy and other governors nationwide have entailed placing their respective states on near-total lockdown and closing businesses. The strategy has worked, but in the process ground commerce to a halt—driving up unemployment and causing major reductions in revenue from taxes on corporations, income, sales, gas, casino and lottery tickets along with fares and tolls.

Because of that, the state is facing a $10.1 billion shortfall through June 30, 2021, including $2.75 billion through Sept. 30, according to projections from the state treasury.

“None of us are looking at where we are as a fiscal matter with a lot of joy right now,” the governor said on Thursday.

But advocates of the bill argue that it includes most of what Murphy wants, and does not deviate too much from the administration’s $5.3 billion of proposed spending cuts and delays.

None of us are looking at where we are as a fiscal matter with a lot of joy right now.
— Gov. Phil Murph

State officials plan to defer billions of dollars in payments until at least October, including $950 million in pension payments, $467 million in school aid payments, $354 million in aid to local towns and cities, and $250 million toward special education.

The administration’s proposal also calls for de-appropriating $920 million that the state treasury initially said back in March it would freeze through June 30—including $135 million from the Homestead property tax relief program, $102 million in tuition aid and $67 million from opioid addiction treatment.

“A lot of the things that have been poised for us to be potentially cut are items that are near and dear to all of our hearts – are things that we, throughout the years, have tried to protect, because they’re good things,” said A3’s sponsor and the chair of the budget committee, Assemblywoman Eliana Pintor-Marin, D-29th District.

But the Legislature’s proposal does restore a small number of spending programs, including more funding for county colleges and four-year universities, and technology upgrades to the state’s beleaguered unemployment system, which is stretched behind thin amid record claims.

The spending plan does not include any tax increases, touted both by bill sponsors and Republicans who nonetheless voted against the measure. Those GOP members, and some open government advocates, scolded legislative leadership for releasing the spending plans Thursday morning, just hours before they were voted on.

And the bill was crafted under the assumption that the Murphy administration would not be able to borrow up to $14 billion from a Federal Reserve program and from the private market.

While that plan passed the Assembly, it’s met skepticism in the state Senate and has been unable to move forward.

State Treasurer Elizabeth Maher Muoio has warned, should the state not get the borrowing authority by Sept. 30, that the administration would have to enact steep cuts the next day, on Oct. 1, when the 2021 fiscal year begins.

Murphy assured that there are no plans to raise taxes through Sept. 30, once the new budget year starts however, that could be a different story.

After all, the current budget year was already halfway over when the pandemic hit, and looking ahead to next year, the state is likely to see a $7.2 billion budget shortfall, the state treasury said. That means the budget would come in at roughly $33.9 billion, rather than the $41.2 billion Murphy proposed in February.

“This is as painful as it can be,” Assembly Appropriations Chair John Burzichelli, D-3rd District, said on Thursday. “What’s coming at us, as we start to negotiate the nine months, will likely be even more difficult.”