Murphy Signs 3 NJ Bills Into Law, May Borrow $9B Amid Coronavirus

NEWS 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. The act was one of three Murphy signed to assist New Jersey amid the pandemic.

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 economic downturn may continue since parts of the state's business industry, including indoor dining, still remain shut. Read more: NJ Coronavirus, Reopen Updates: Here's What You Need To Know

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.

“The passage of this legislation is an important step in New Jersey’s recovery from the economic ravages of the COVID-19 pandemic," Murphy said. “While this is by no means a silver bullet, the ability to responsibly borrow is essential to meeting our fiscal needs in the coming year.”

Republicans, however, say they're suing to stop "his ill-advised and unconstitutional borrowing."

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."

“The governor’s borrowing scheme includes $2.7 billion to fund shortfalls that he says exists in the current fiscal year. That frankly does not make any sense," Pennacchio said. "He recently signed a balanced budget extension bill that will get our state through the end of the fiscal year in September, claiming we’ll end the year with a $1 billion surplus."

The state is authorized to borrow either through the issuance of general obligation bonds that can be sold to investors, or through the federal government’s Municipal Liquidity Facility.

That latter entity was established to help states and local governments across the country deal with the fallout from the global pandemic. The state is also authorized to refinance bonds issued pursuant to the bond act.

Debt service on this bond issuance will be repaid through the state’s General Fund.

Murphy stressed that the state plans to borrow only what is necessary to speed New Jersey’s recovery from this unparalleled recession.

“The current economic crisis is virtually unprecedented in both its severity and swiftness,” said Murphy. “Our unemployment numbers and drop in revenue have both far outpaced the worst months of the Great Recession so while we see this bill as an important step, our ultimate recovery will depend on a number of factors including additional federal aid and savings within state government.”

The bill was sponsored by Democratic Senate President Steve Sweeney and Sen. Paul Sarlo in the Senate and Assemblywoman Eliana Pintor Marin and Assemblyman John McKeon in the Assembly.

“This will give us the ability to provide the resources needed to respond to crisis economic conditions resulting from the coronavirus,” said Senate President Steve Sweeney. “It also includes a process to ensure responsibility in managing public finances as we work through the fiscal problems that are not fully known. We want to be responsive to financial needs, but we also have to be fiscally responsible and recognize the long-term consequences of actions we take.”

Murphy also signed these bills into law:

• S-2085/A-3785 (Sweeney, Oroho/Greenwald, Mazzeo, Pinkin) "Electronic Construction Procurement Act."
• S-973/A-1408 (Ruiz, Singleton/Lopez, Reynolds-Jackson, Timberlake) Requires Commissioner of Labor and Workforce Development to establish apprenticeship mentoring program for women, minorities, and persons with disabilities.