As lawmakers in Trenton began to crunch the numbers for the FY 2021 budget, Republican members of the Senate Budget & Appropriations Committee attacked the Murphy Administration’s for what they see as false revenue projections during the coronavirus pandemic.
GOP State Senators argument was augmented by a fiscal analyst from the nonpartisan Office of Legislative Services (OLS) on April 6 that estimated tax collections through March are coming in nearly $3.7 billion higher than Gov. Phil Murphy projected when the current budget was approved in September.
“The Murphy Administration peddled outrageous claims about the state’s finances over the past year that have proven to be completely false,” said State Sen. Steve Oroho (R-24), the Republican Budget Officer. “Going back to last July, we had clear signs the state’s financial picture was better than expected despite the Murphy Administration’s measures that needlessly destroyed so many businesses.”
“The governor stuck by his false projections to secure approval for unnecessary tax increases and an otherwise unconstitutional borrowing scheme to build a massive surplus that he could spend while he runs for reelection,” added Oroho.
At various times during the pandemic, Murphy stated New Jersey was at risk of a budget shortfall as high as $30 billion due to revenue losses resulting from the economic impact of the coronavirus. Murphy was able to persuade his fellow Democrats to approve up to $9.9 billion borrowing plan to help bridge the anticipated shortfall.
“Under the cover of the pandemic, Gov. Murphy pressured Democrats in the Legislature to pass tax increases, sold the Supreme Court on a $9.9 billion borrowing plan, and pled for billions more from the federal government,” said State Sen. Sam Thompson (R-12). “To say that the governor exaggerated the impact of the pandemic would be an understatement of epic proportions.”
Murphy borrowed $4.3 billion in November after certifying a reduced revenue shortfall to the Supreme Court, saying the funds were needed to keep the government running and avoid layoffs for teachers and first responders.
A representative from OLS testified to the Budget Committee that the borrowing “was not essential” to balancing the current budget.
“Today, we’re learning that virtually every dollar of the multi-billion dollar revenue loss that the Murphy Administration projected and certified to the Supreme Court to justify his borrowing scheme has failed to materialize,” said State Sen Michael Testa (R-1). “Unfortunately and likely intentionally, he structured the debt to prevent us from paying it back early once we realized it wasn’t needed to compensate for the ’emergency’… New Jersey taxpayers are stuck repaying $4 billion of unnecessary debt with interest for the next dozen years.”
Election Year Politics
GOP lawmakers skewered Murphy for pressuring Democrats in the Legislature to approve an income tax increase, extending an expiring corporate business tax surcharge last Fall to generate even more revenue and spending a $6 billion budget surplus in the new fiscal year that starts in July.
“Instead of helping people and businesses when they were desperate for assistance over the past year, Governor Murphy sat on a mountain of hoarded cash that he kept in reserve to spend in his election-year budget,” added State Sen Declan O’Scanlon (R-13). “He’s proposing to blow out spending at record levels with borrowed, surplus, and federal relief funds, but he’s not telling New Jerseyans the truth that it’s unsustainable.”
“When those funds are gone, don’t be surprised when he calls for more tax increases to sustain the bigger and more expensive government he’s brought to New Jersey.”
State Sen. Paul Sarlo (D-36), chairman of the Senate Budget & Appropriations Committee, said now is the time for the Governor and the Legislature to work in partnership on how federal aid is best allocated. Up until now, the executive branch has exercised control of monies from the nation’s capital.
“The dollars may originate in Washington, but the spending overlaps and interacts with state money, state services and the state’s economy,” said Sarlo. “The Legislature should have a shared responsibility for the use of federal funds.”
The Bergen County lawmaker concurred with is Republican colleagues that now is the time to get a handle on this portion of state finances.
“I look forward to an informative update on the state’s emergency borrowing: How the money is being used? How much has been spent and how much remains? How it will be repaid? And why it was issued as ‘non-callable’ bonds?” said Sarlo.