Gov. Phil Murphy took aim at the U.S. Senate Majority Leader on Wednesday over his efforts to keep any state bailout money out of an upcoming, fifth iteration of the federal Coronavirus Aid, Relief and Economic Security Act, warning that without federal support, New Jersey could have to slash another $1 billion of funding for local schools.
The White House and Republicans on Capitol Hill are sorting out what the new CARES Act legislation would look like. Their plan calls for cutting the $600 a week in added jobless benefits, and enacting payroll tax cuts and legal protections for small businesses from COVID-19 lawsuits.
It lacks the hundreds of billions of dollars in state aid that congressional Democrats and many governors argue is vital for states that have seen their tax revenues crater as a result of the global pandemic.
That aid is, however, part of a version of the CARES Act, the $3 trillion HEROES Act.
That measure passed the Democratic-controlled U.S. House of Representatives and calls for a second $1,200 stimulus check, billions of dollars in aid for state and local governments, and an extension of the $600 per week jobless benefits.
U.S. Senate Majority Leader Mitch McConnell, a Kentucky Republican, has dismissed the bill as a “wishlist” and “dead on arrival,” promising it would not survive in the Senate.
“This is a slap in the face of any governor … who has shouldered the responsibility of this pandemic,” Murphy responded at a Wednesday COVID-19 press briefing in Trenton. “What New Jersey has gotten back is a drop in the bucket compared to our needs.”
The governor’s warning, both at a Wednesday press conference and over the past several months, has been that the state faces a $10 billion loss of revenue through the end of June 2021, as the pandemic and ensuing recession cause massive sums of tax dollars to simply evaporate.
New Jersey will not truly know the full extent of damage to its economy and tax coffers until the state treasury has had time to crunch numbers from the wave of tax filings submitted ahead of an extended July 15, 2020, deadline.
Tens of thousands of businesses have had to stay closed during the pandemic, both in New Jersey and around the country, in order to starve the virus of any person-to-person contact that might provide it with new hosts. That’s driven up unemployment, and forced employers out of business entirely.
Compounding that could be another financial hit to the state and its economy from a widely expected second wave of COVID-19 that coincides with the fall flu season, and upwards of another $20 billion in shelled out expenses to prepare for and try to contain the pandemic.
Murphy and Democratic lawmakers approved a $9.9 billion bonding proposal, that along with austere budget cuts and delayed payments, should help keep many of the state’s finances afloat. But, state Republicans are suing to block the plan, and oral arguments at the state Supreme Court are scheduled for Aug. 5.
Murphy’s $40.9 billion Fiscal Year 2021 budget from February has been effectively thrown out the window, and a new spending plan to cover expenses between Oct. 1 and the end of next June calls for a $7.2 billion budget shortfall.
“We are staring directly at a $1 billion cut in aid to our public schools,” the governor said on Wednesday. “And, we’ll have to further cut operating aid to our struggling colleges and universities, which we have already cut by over $200 million.”
“Sen. McConnell has never had to balance a budget – never.”