NJ Gov. Phil Murphy’s coronavirus recovery plan to borrow $5B advances among state lawmakers

The funds would be put toward 'crucial government operations'

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New Jersey’s Democratic Gov. Phil Murphy’s plan to borrow $5 billion for coronavirus-related recovery efforts is expected to be taken up by state lawmakers this week.

Murphy has discussed borrowing $5 billion, since interest rates are historically low, to deal with the “unprecedented fiscal crisis” that has resulted from the pandemic. That money would be put toward funding government operations.

The state would need the approval of its legislature in order to move ahead with the plan.

“We have no choice but to get both bonding approved by the Legislature in our own state, and then federal cash assistance coming our way as a result of action by Congress and a bill that the President, God willing, will sign,” Murphy said at a recent press briefing. “But the answer is sooner than later.”

The Federal Reserve announced last month it would buy as much as $500 billion worth of debt from state and local governments as part of its Municipal Lending Facility.

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The state assembly is expected to take up the proposal on Thursday. Assembly Speaker Craig Coughlin, a Democrat, backs the plan, though he has said it’s “not ideal.”

“To help us through the unique challenges and the significant revenue loss the coronavirus public health emergency has caused, I will support legislation to responsibly borrow funds to make up for our substantial revenue shortfall and stimulate our economy,” Coughlin said in a statement late last month.

The New Jersey's treasurer has estimated revenue losses in excess of $10 billion.

Murphy said at a press conference last week that if New Jersey doesn’t get state aid and approval to borrow, “everything’s on the table” in terms of its budget decisions.

“There’s nothing sacred,” Murphy told reporters.

When asked whether he thought borrowing could impact the state’s credit rating due to higher debt levels, Murphy and other state officials said they had been in contact with ratings agencies.

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Meanwhile, governors from states hardest hit by the virus outbreak are locked in a fight with some Republican lawmakers who don’t believe they should receive any additional funding from the federal government.

For example, New York Gov. Andrew Cuomo has traded words with Kentucky Republican Sen. Mitch McConnell and Florida Republican Sen. Rick Scott over the state’s need for aid. Scott has accused Cuomo – and other governors – of mismanaging their budgets and has called the request for more federal aid a “bailout.”

The Florida senator has said the government has already doled out $1 trillion in funding and loans to state and local governments.

Cuomo has said New York needs about $61 billion or it faces 20 percent budget cuts as it loses out on billions of dollars in tax revenues.

New Jersey is set to enter phase two of its reopening process on June 15, which will allow nonessential retailers to reopen as well as indoor and outdoor dining.

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