Gov. Phil Murphy Warns of Financial Disaster At New Jersey’s Doorstep

Gov. Phil Murphy warned a “financial disaster” is the next surge the state government will have to confront.

“A fiscal disaster is not months away. These decisions will be on our doorstep in literally just a few weeks,” Murphy stated on May 4. “We are on the brink of having to make very tough and quite frankly, very unpalatable decisions.” 

The proclamation came as the governor signed an executive order rescinding the state’s Department of the Treasury from having to achieve a nearly $1.3 billion surplus by the end of this current fiscal year.

Tough Financial Choices

“No one has been more committed to restoring our state’s fiscal foundation than I have,” said Murphy. “We have spent the past two years working nonstop to build surpluses and put money aside for a rainy day fund. However, in the absence of significant federal assistance…a $1.28 billion surplus for this fiscal year is no longer realistic.”

The first-term Democratic governor said the severity of the financial crisis is a result of both plummeting state revenues due to the near total shutdown of the economy and the skyrocketing costs of fighting the coronavirus pandemic

Layoffs on the Horizon 

“Layoffs (are) already happening at municipal levels,” said Murphy. “This is not a theoretical argument. But I think it’s going to be a question of scale, whether or not this is here and there or if this is a massive, across-the-board reality, and please God it is not that.”

According to Murphy, larger cuts would include police, firefighters, EMTs and paramedics, public health workers, educators and “the hardworking folks processing a mountain of unemployment claims…on the job and working to get us through this.”

The governor said the best way to avoid layoffs on a broad scale rests on the combination of the state’s ability to borrow and federal assistance, specifically an interpretation of The CARES Act allowing the state to use the aid in ways they see fit.

Federal Cash

“That’s an important piece, that we get a big bucket of federal direct cash assistance through Congress and a bill signed by the President,” said Murphy, a former executive at Goldman Sachs. “We need the federal government to step forward with significant investment in our states, both red and blue, to prevent our recovery from being held back because we cannot fund it.” 

“Across the country, cuts to critical services are inevitable and bankruptcy is not an option.”

To give the state the ability to borrow at rates that are currently very favorable, Murphy called on the state Senate and Assembly to give him the ability to do so. 

Borrowing Option

“We will still need to borrow on a short-term basis to bridge our immediate cash flow needs,” said the governor. “Even Warren Buffett said this weekend, this is a good time to borrow money.”

Additionally, Murphy intends to veto numerous bills approved by the legislature as a result of not having the appropriate amount of money to properly fund the programs. 

“I don’t want to veto them. But given our current fiscal situation, I have no other choice,” said the governor

3 comments

  1. This crisis is the opportunity and incentive to fully reform NJ’s finances: tax reform, pension reform including transition to defined contribution plans, reduce reliance on property taxes. Education reform reducing classroom time & increasing online self paced education.

  2. Don’t even think about raising the real estate tax! New Jersey citizens are overtaxed as it is, without having the benefit of commensurate services, thus causing more people to flee from New Jersey than any other state in the Union.

  3. How about bringing back some of that Bucket Blue State Money Home to NJ? Let’s start there folks. My suggestion is to keep our tax dollars here in NJ and not contribute to the other states in our union; the federal pool. Each year NJ tax payers pay into this federal fund a considerable amount of money. NJ, Conn., NY, Mass. pay billions into the federal pool of money that all states draw from. On average we get back 85-90 cents on the 1$ we put in. You know who gets back a significant amount more than they have given? You guessed it. Kentucky. Congratulation on being a taker Mitch! Virginia, Mississippi, Alabama. These are just a few that draw OUR dollars from the federal pot. They take hundreds of millions of dollars if not billions. That money comes from the Blue States as Mitch divisively calls us. Do not be naive. This play is to once again try and break teacher, police, firefighters, and public employees unions, benefits and pensions. If we let the WH and self-serving GOP representatives divide us then shame on us. Stand together .Stand NJ strong!! In NJ we care about our neighbors and friends. We race to the top, not dive down in the muck. We must support each other as the WH tries to divide and conquer for their own selfish benefit. Please NJ residents, do not play into their disingenuous and hyperbolic narrative.

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