NJ Supreme Court Sides With Gov. Murphy On $9.9B Borrowing Plan

NEW JERSEY - Gov. Phil Murphy signed the New Jersey COVID-19 Emergency Bond Act into law on Thursday, allowing the Garden State to borrow up to $9.9 billion to address what lawmakers are calling "the unprecedented fiscal crisis" that's a consequence of the coronavirus crisis on July 17, and on Wednesday the plan was upheld by the New Jersey Supreme Court.

Republicans in New Jersey had sued to block the move. State Sen. Joe Pennacchio said "it is the definition of insanity" to "blindly approve" borrowing $9.9 billion when the executive branch "has not even proposed a budget yet for next year and we have no clue how much we will actually need."

Under the law, the state has the authority to issue bonds totaling $2.7 billion for the remainder of the extended Fiscal Year 2020, which runs through Sept. 30. Murphy, however, has not ruled out pushing for a tax increase to also make up for the shortfall in revenues that's happened as a result of shutting down the economy.

The law also allows the state issue up to an additional $7.2 billion for the nine-month Fiscal Year 2021 that runs from Oct. 1 through June 30, 2021, for a combined amount of up to $9.9 billion to be issued over the two periods.

Speaking at his Wednesday COVID-19 briefing, Murphy said that borrowing was not something anyone wanted to do but that Washington's inaction is what made it necessary.

"You know the expression 'go big or go home?' Well that is what Mitch McConnell did." Murphy said. "We went home during this moment in history."

Caveat To The Ruling

In his ruling, Chief Justice Stuart Rabner noted that the Legislature acted on the best information available to it when, on July 16, 2020, it adopted a law that called for up to $9.9 billion in borrowing. But Rabner said that as information and projections change, the borrowing amount will not be allowed to change with them.

"To avoid borrowing in excess of what the law allows, and to be faithful to the Emergency Exception, we require that the Governor or the Treasurer certify the State’s projected revenue figures and the shortfall resulting from the COVID-19 pandemic before each tranche of borrowing," Rabner wrote. "The State may not borrow more than the amount certified, and not more than $9.9 billion in total. In other words, if, at the time the State seeks to borrow money or issue bonds, the Governor or the Treasurer certifies that the shortfall resulting from the pandemic is estimated to be $7 billion, the State cannot borrow more than that amount."

You can read the entire ruling on the court website.

This post contains reporting by Tom Davis.

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