The governor sent a bill back to the state Legislature late Friday that would have granted towns, cities and counties the ability to borrow money for offsetting losses from the COVID-19 pandemic, and handle costs that have cropped up for handling the virus.
Gov. Phil Murphy, in a conditional veto, said that he wanted to limit the lifetime of these loans, called “coronavirus relief bonds” in the legislation, to just five years.
And, the governor added, he wants the bill to be changed so that it expands the state’s special emergency mechanism – an existing legal framework outlining part of the ability for public governments to borrow money – “to address certified COVID-19 related deficits in operations.”
Under Assembly Bill 3971, local governments could borrow bonds equaling up to 30 percent of their budget, backed by local property tax revenue and payable over a decade.
Local officials warn that they are burning through tax revenue, or that most of it has simply dried up during the pandemic.
A similar proposal at the state level, letting Murphy borrow up to $9.9 billion to help the cash-strapped state in a much similar situation, is slated for oral arguments this Wednesday before the State Supreme Court.
“By incorporating into our existing local borrowing framework certain tailored modifications designed to meet local units’ emergent needs, we will be able to accomplish the goal of helping address local fiscal needs resulting from the COVID-19 pandemic while maintaining the protections of existing safeguards, which will help ensure that local borrowing is conducted efficiently and responsibly,” the governor wrote in his conditional veto message.
The two sponsors in the upper and lower chambers – Sen. Troy Singleton, D-7th District, and Assemblyman Daniel Benson, D-14th District, respectively – could not be immediately reached for comment.
New Jersey was among a handful of states in the Northeast that were hit hard by the virus in March and April and the physical distancing measures meant to keep the virus from spreading have forced many businesses to close, shuttering commerce, and triggering widespread unemployment and a financial catastrophe for state and local governments.
“Municipalities, local governments in general, have experienced a record decline in revenues as a result of loss of permitting fees, licensing fees, parking revenues, court fines … hotel taxes,” Michael Cera, executive director of the New Jersey League of Municipalities, said at a Tuesday hearing of the bill last week.
“This is an unprecedented and swift loss of revenues with the inability to recoup those revenues,” he added.