Although the administration can borrow up to $9.9 billion to make up for revenues lost during the COVID-19 economic downturn, Gov. Phil Murphy’s $32 billion 2021 budget proposal calls for borrowing just $4 billion.

Under a state Supreme Court ruling issued earlier in August, the Murphy administration can only borrow up to what the state treasury certifies as actual hits to its revenue.

“The hole that we are predicting for revenues is now $5.6 billion,” State Treasurer Elizabeth Maher Muoio said in a press briefing Monday evening. “We couldn’t go up to the higher amount unless we felt that the revenues declined even further.”

Under the high court ruling, COVID-related expenses could include “masks, respirators, and field hospitals, and for direct aid to individuals and families afflicted by the disease,” in addition to “public services like education, police, fire, first aid, child welfare, and prisons — to secure the continued functioning of government.”

All of these, Murphy warned before the decision was issued, were things that would have to be gutted if the state were not given the ability to borrow.

What’s not clear is whether the state would need to incur further tax increases down the road – on the sales and property taxes – in order to finance debt payments if revenue does not materialize.

An administration official said that the first round of payments for the bonds is baked into the current budget proposal.

Roughly half of the borrowing would be through a Federal Reserve program meant to soften the financial blow states saw because of the pandemic and would be paid back in three to five years. The other half would be through the private market and could take several decades to pay back.

Murphy’s borrowing proposals will need the approval of a four-person legislative committee, put in place to ensure the state only borrows as much as it needs.