Gov. Phil Murphy’s $32 billion spending plan calls for a record $2.2 billion surplus – one of the largest in recent history – to help soften the blow of a widely anticipated second wave of the COVID-19 virus.
State Treasurer Elizabeth Maher Muoio, at a Monday evening press briefing, pointed out that the surplus, which the state gradually built over the past two years, “vaporized this spring when we were hit by this pandemic.”
The first ever deposit into the rainy day fund in nearly a decade was made by the administration in May 2019, when the state dropped $317 million into the account.
Murphy called the surplus a “much-needed cushion against revenue shocks from a second wave.”
“This surplus is not a luxury. It is a product of lessons learned,” the governor said at his Tuesday morning budget address at Rutgers University’s 53,000-seat SHI Stadium in Piscataway.
The build-up of a surplus would be in anticipation of another $1 billion in tax revenue that the pandemic could burn through if the virus makes another go across the state, a scenario widely anticipated to coincide with the fall flu season.
“When it comes back to New Jersey … it’s going to have a serious fiscal impact on the state, in terms of money coming in,” said one administration official.
Assembly Republican Leader Jon Bramnick, R-21st District, said that the use of bond proceeds to pay for the surplus was an inappropriate and unwise move on the part of the administration.
“To go out there and brag about a surplus when you’re borrowing the money to put in the surplus, I think it’s misleading,” he told reporters following the Tuesday budget address at Rutgers’ SHI Stadium in Piscataway.
“A surplus is only when you have a good budget manager and you’ve cut and you saved,” Bramnick added. “You want to borrow money, just don’t act like you saved it. A surplus is when you had such a robust economy that you were able to save money.”
A considerable chunk of the $4 billion in bond money would go toward financing the surplus, which the state treasurer maintained fell within how the administration could use bond proceeds.
“That’s why we’re proposing this,” Maher Muoio said.
The state Supreme Court dismissed a GOP-led suit trying to block the borrowing proposal on the grounds that it was unconstitutional. Under that ruling, however, the administration needed to certify the budget hole it was actually looking at that would be alleviated by borrowing.
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.”
Editor’s note: This story was updated at 12:46 p.m. EST on Aug. 25, 2020, to include remarks from Gov. Phil Murphy and Assembly Republican Leader Jon Bramnick.