Gov. Phil Murphy approved a $7.6 billion emergency spending plan – $100 million less than the budget lawmakers sent him a day ago – to cover the costs of government for the next three months, as the state grapples with the COVID-19 pandemic and ensuing economic havoc.
The money will keep the lights on in the state through Sept. 30, the updated deadline to hash out a Fiscal Year 2021 spending plan that will be billions of dollars less than what Murphy proposed in February.
“In the most essential terms, this three-month plan can be described in two words – cuts and uncertainty,” Murphy said Tuesday afternoon at his daily COVID-19 press conference at the Trenton War Memorial.
It lacks “in so many of the programs and initiatives that we care so deeply about,” the governor added.
The short-term budget cuts “non-salary operating expenses” by 5 percent, while “discretionary grants” are cut by 10 percent.
His budget “de-appropriates” $1.2 billion that Murphy initially approved in the 2020 budget, and guts $850 million of proposals he laid out in February.
“The fiscal impact of the COVID-19 pandemic is [as] unprecedented as the public health emergency itself,” the governor said.
His budget calls for delaying more than $4 billion until Oct. 1, which is the new start of the 2021 fiscal year – rather than July 1.
That includes wide swathes of local aid programs, such as for K-12 education. Funding to hospital charity care is slated to be the same for the next three months, as are tuition assistance programs, such as the Education Opportunity Fund and Community College Opportunity grants.
The budget cuts the Senior Freeze and Homestead Benefit property tax relief programs, and delays pension payments into October.
Murphy’s budget calls for a $956 million surplus through Sept. 30, which would effectively replenish the state’s rainy day fund.
The governor and the state treasury expect something of a windfall from sales tax “as we begin our restart.”
The state is slated to bring in $8.625 billion in tax revenue, up $462 million from what the administration anticipated in May.
“We know all that can just as easily melt away if consumer confidence in our recovery falters,” Murphy said.
Murphy has to introduce a nine-month budget by Aug. 25, to cover the costs of state government between Oct. 1, 2020, and June 30, 2021.
While Murphy initially proposed a $41.2 billion budget, data from the state treasury indicates the state would have to drastically cut the proposal enough to bring it down to $33.9 billion.
Murphy and legislative leaders have all agreed that determining a budget would mean deep and painful cuts to a slew of social service programs.
“There’s nothing to be excited about, quite frankly,” Senate Budget Chair Paul Sarlo, D-36th District, said during the Monday Senate voting session. “This is a very difficult time that we are now in and I believe for the next 12 to 18 months.”
Murphy has argued that his administration needs the authority to borrow up to $14 billion from private markets and a Federal Reserve program and that the state needs billions of dollars in federal aid.
While his oft-times political foe Senate President Stephen Sweeney, D-3rd District, said on Monday that talks were underway to possibly introduce the legislation on the Senate side this week, and as soon as Tuesday, Murphy dashed those hopes at his press conference that same day.
“We continue our discussions with the Senate president,” the governor said, indicating that a deal had not yet been reached.