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Legislator Gives Murphy Administration a $10 Billion Blank Check
the staff of the Ridgewood blog
TRENTON NJ, Governor Phil Murphy signed into law the “New Jersey COVID-19 Emergency Bond Act,” which authorizes the state to borrow up to $9.9 billion to address the unprecedented fiscal crisis that has arisen as a consequence of the COVID-19 pandemic.“The passage of this legislation is an important step in New Jersey’s recovery from the economic ravages of the COVID-19 pandemic,” Governor 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.”
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 September 30, 2020, and up to an additional $7.2 billion for the nine-month Fiscal Year 2021 that runs from October 1, 2020 through June 30, 2021, for a combined amount of up to $9.9 billion to be issued over the two periods.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, which 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.Governor 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 Governor 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 law also establishes the Select Commission on Emergency COVID-19 Borrowing, comprised of two members of the Senate selected by the Senate President and two members of the General Assembly selected by the Speaker of the General Assembly, which must approve any proposal to issue bonds prior to their issuance.The bill was sponsored by Senate President Steve Sweeney and Sen. Paul Sarlo in the Senate and Assemblywoman Eliana Pintor Marin and Assemblyman John McKeon in the Assembly.
From the Senate: Voting along party lines – with two notable execeptions – with (most publicly passionately) Republicans opposed and unthreatened Democrats relying on their comfortable majority, the state senate today affirmed S-2697, a $9.9 billion borrowing bill ostensibly aimed at keeping New Jersey’s budget afloat during the COVID-19 crisis.