Gov. Phil Murphy assured that the state’s unemployment fund “should” be fine despite a massive surge in applicants in the wake of the COVID-19 economic crisis, as long as the federal government steps in.
New Jersey’s unemployment fund clocks in at $2.4 billion as of Sunday, according to the labor department, and the federal government has roughly $200 billion that can be tapped into by states in scenarios where demand for insurance outstrips the supply.
“With the state’s fund and federal money, that should be enough,” the governor told reporters Tuesday at his daily press briefing on the pandemic.
Unemployment applications climbed in recent weeks, as the mass closure of tens of thousands of businesses force many people out of work.
There was a 20.6 percent spike in unemployment claims between March 2019 and March 2020, according to the New Jersey Department of Labor and Workforce Development.
A bill sent to the governor’s desk would expand the state’s unemployment fund by $20 million to help workers who’ve lost their jobs during the pandemic, but it has not yet been signed.
Murphy and the state’s congressional delegation have pushed for more federal stimulus money to flow to New Jersey, both to plug holes in its budget and help cover the exponential costs of containing the COVID-19 outbreak.
Last week, Murphy signed off on a letter with the governors of Connecticut, New York and Pennsylvania pressing the Trump administration for a combined $100 billion bailout. New Jersey could need upwards of $20 billion from that money to plug holes in its own budget, Murphy said, as COVID-19 decimates commerce and the tax revenue on which the state budget relies.
The latest federal aid package agreed upon by Congress and U.S. President Donald Trump would clock in at $2 trillion, in an effort to keep money flowing through the market while businesses remain shuttered and millions of Americans go without work.
During the Great Recession, then-Gov. Jon Corzine and the state Legislature required $1 billion from the federal government – in the form of a loan – to shore up unemployment as the jobless rate soared.
“The purpose of the federal stimulus money in 2009 was basically to give states enough money to offset their revenue losses,” said David Rosseau, who was state treasurer under Corzine between 2008 and 2010, at the height of the recession.
“If we hadn’t got $1 billion, we would have had to reduce” aid elsewhere, that would have caused pain in “other parts of the economy.”
And to some extent, that scenario has begun to play out again: On Monday, the State Treasury said that it was freezing nearly $1 billion in state spending through June 30 as the COVID-19 outbreak leads to potentially “significant” nosedives in state tax revenue.
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.
Going into the COVID-19 recession, state revenue was strong on all fronts for the first three quarters of 2020 fiscal year, which runs July 1, 2019 to June 30, 2020, leaving just the last stretch of the year that could be clobbered.
But Murphy’s $40.9 billion spending plan, which he unveiled in late February, could find itself in even graver uncharted territory. And despite a $1.5 billion surplus expected for the end of the current fiscal year, Murphy said Tuesday night on the “Ask Governor Murphy” radio segment on WBGO that the state has been “plowing” through those dollars.
“Hopefully … that clarity” from the federal stimulus bill, will let state officials, budget planners and lawmakers regroup, Rousseau said.