New Jersey is just weeks away from a “fiscal disaster” as the state’s finances collapse amid a global pandemic and costs mount for dealing with the virus, Gov. Phil Murphy said Monday afternoon, warning that he might have to lay off thousands of state workers and slash public services to balance the budget.
All told, Murphy said, the state could see a shortfall of between $20 billion and $30 billion by the end of June 2020 – out of a $41 billion budget.
“Right now, it’s pouring,” Murphy said Monday at his daily COVID-19 press briefing in Trenton. “We are on the brink of having to make very tough, and quite frankly, very unpalatable decisions.”
The Murphy administration has fallen back to federal aid from Congress, lest the state sees “historic” public worker lay-offs, while the governor has pushed lawmakers for “swift passage” of a bill that would grant him broad power to borrow for the state’s budget.
To contain and blunt the impact of the COVID-19 outbreak, Murphy and governors across the country have placed their states in near-total lockdown. The process has shown many signs of working; such as a slow and steady drop in new positive cases, hospitalizations and fatalities. But in the process, commerce in New Jersey has come to a screeching halt, and revenue from the state’s income, gas, corporate business, sales, lottery and gambling taxes have evaporated, as well as tolls and transit fares has dried up.
The congressional delegations for New York and New Jersey are seeking a combined $40 billion of federal aid for states, proposed under a fourth landmark stimulus bill in Congress.
Despite some degree of camaraderie between Murphy, a Democrat, and U.S. President Donald Trump, a Republican, the president has been cautious about federal dollars to shore up state finances, calling it a “tough question.”
“We don’t see it as a bailout,” Murphy said to Trump last week during a meeting in the Oval Office. “We see this as a partnership, doing the right thing in what is the worst health care crisis in the history of our nation.”
The proposed borrowing mechanism, known as the New Jersey COVID-19 Emergency Bond Act, calls for the governor to borrow at least $5 billion from the Federal Reserve for short-term relief in the state budget.
“We need to have these funds as a safeguard should direct federal assistance to our state fail to surface,” Murphy said.
He made the case Monday in several bill veto statements sent back to lawmakers.
“Passing the Bond Act is essential to ensuring the State can meet its short-term obligations in light of present revenue and liquidity challenges,” each of the five veto statements reads.
The bills Murphy nixed could not be rolled out quickly enough to deal with the “here and now” challenges the state is facing in dealing with the COVID-19 outbreak, or the finances are simply lacking.
“They’re completely well-intentioned,” Murphy said. “Up until a few months ago, these are things that we would clearly entertain, but we just don’t have the shekels to do that.”
Even still, legislative leadership has begun pressing Murphy for an alternative to furloughing up to 100,000 state and local workers.
That plan would allow workers to collect currently more generous unemployment benefits, stay off the public payroll and retain retirement and health benefits, all while the state saves $750 million, according to its main proponent, Senate President Stephen Sweeney, D-3rd District.
The program, Sweeney said, would provide “savings today while many workers are restricted from performing their full duties, while providing needed savings, which could provide protection from layoffs in the future.”