New Jersey is freezing $920 million of spending through June 30, the state treasurer announced Monday, as the COVID-19 outbreak decimates commerce and leads to potentially “significant” nosedives in state tax revenue.
Some of the biggest items being frozen are $141.8 million in the Homestead property tax relief program, $71 million in college operating aid, $45 million in municipal aid, $32 million in New Jersey Economic Development Authority grant programs, $31.4 million for patient support at county psychiatric hospitals, $21 million both in tuition assistance and child support programs.
The state can expect “precipitous declines” in income tax, corporate business tax, sales tax, gas tax, casino-related taxes and lottery taxes, according to a bond disclosure the State Treasury filed on March 23.
Gov. Phil Murphy rolled out sweeping business closures over the past week, as well as a stay-at-home order on Saturday, in an effort to drastically reduce human interaction and prevent the COVID-19’s spread.
The move has virtually shut down entire sectors of the economy, causing unemployment in the state to soar.
“We have no choice,” Murphy said at a telephone press briefing on Sunday. “That economic impact will be overwhelming one way or the other. I’d prefer to take it now and I’d prefer to take it in concert with keeping deaths and sicknesses as low as possible.”
Murphy unveiled his budget address on Feb. 25, which laid how much money he expects the state would have by the end of the current fiscal year on June 30. His address last month also outlined a $40.9 billion spending plan for the year ahead. But those revenue estimates might need a near-complete overhaul because of the drastic changes in state tax revenue, according to the state treasury.
“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 economy and financial condition,” State Treasurer Elizabeth Maher Muoio said in a Monday statement.
Murphy has maintained the federal government would need to step in with a stimulus package to plug holes in the state’s budget.
Last week, he signed off on a letter with the governors of Connecticut, New York and Pennsylvania pressing the Trump administration for a combined $100 billion bailout.
“Without this funding, we will be forced to make incredibly difficult choices in light of our new fiscal reality. We share your deep concern for the economic security of all of our residents,” reads the letter. “But make no mistake: if states do not receive immediate financial support with sufficient flexibility to address our unique fiscal challenges, the principal impact will be borne by the millions of Americans who reside in our state.”
Murphy told reporters on Sunday that he expects New Jersey could need upwards of $20 billion to plug holes in its budget.
“There’s just a whole lot of things we don’t know right now until we sit down with the governor, the speaker and myself and come up with a game plan,” Senate President Stephen Sweeney, D-3rd District, told reporters last week. “We’re in uncharted waters.