Gov. Phil Murphy announced Friday the administration had reached an agreement with state Senate President Steve Sweeney and Assembly Speaker Craig Coughlin on legislation to authorize the state to borrow up to $9.9 billion to address the financial crisis created by the coronavirus outbreak.
The Assembly had previously voted to allow such borrowing. Friday’s agreement means the Senate will now take up the bill — which now has specific guidelines for how the borrowing will be done.
Under the agreement, a four-person panel comprised of two members of the Senate and two members of the Assembly would have to approve each request to borrow with a majority vote.
No tax increases are part of the bill — and were not part of the discussion, Murphy said. That being said, tax increases are almost a certainty.
Murphy said it’s too early to tell on taxes, then offered his own opinion — that those who have “succeeded” should help pay for “a comprehensive program toward shrinking the inequities in our state.”
The Senate budget committee will meet next Tuesday to consider the legislation. The full Senate is scheduled to take it up next Thursday.
Murphy, who has been pushing the ability to borrow for months, applauded the agreement and is eager to get it approved as soon as possible.
“It is absolutely critical that we get this done and get this done quickly,” he said during his COVID-19 briefing. “And, now we can.”
Sweeney (D-West Deptford) said he and Sen. Paul Sarlo (D-Wood-Ridge), the chairman of the Senate Budget and Appropriations Committee, will serve on the committee. A spokesperson for the Assembly said it has not been determined who will join Coughlin (D-Woodbridge) to represent that legislative body.
It is likely, however, that it will be a Democrat, meaning all four committee members — as well as Murphy — are from the same party.
That’s not sitting well with Republicans, who said they were left out of the discussion.
Assembly Republican Leader Jon Bramnick (R-Westfield), Sen. Steven Oroho (R-Sparta) and state GOP Chairman Doug Steinhardt — in a statement that was released about 90 minutes after the agreement was formally announced — said they will go to court in an attempt to block the deal.
It is unclear what grounds they have for a case.
“Today, the Democrats in our state agreed to pile billions more in debt onto our children and grandchildren’s shoulders,” they said in a statement. “This debt plan is bad policy, and, without voter approval, is clearly unconstitutional.
“We will file suit to stop it.”
The deal wasn’t necessarily embraced or rejected by leading business organizations.
Tom Bracken, the head of the New Jersey Chamber of Commerce and a strong voice for lower taxes and state spending, said the move couldn’t be avoided.
“I think it was inevitable that some level of borrowing had to take place,” he said. “I don’t think anybody denied that.”
Bracken said he’s hopeful the legislative committee will help.
“To me, by setting up this legislative committee, they now have controls over the amount being borrowed and will limit the borrowing to absolute necessity,” he said.
Christopher Emigholz, the vice president of government affairs for the New Jersey Business & Industry Association, said his group recognizes the extraordinary times, but he said the deal “appears to stop short of some of the necessary limits that would make for responsible borrowing” and that the state should borrow nothing more than what is needed in the short term.
The long-term nature of the borrowing will impact generations, Emigholz said.
“A total of $9.9 billion in bonds with 35-year maturity will cost New Jersey taxpayers at least many hundreds of millions of dollars in additional debt service costs for the next 35 state budgets,” he said. “New Jersey already is one of the most indebted states in the nation, and this makes our state less affordable now and into the future.”
Murphy said the state cannot afford to wait — while acknowledging it was a move he didn’t want to make.
“In think, in fairness, everyone recognized the need for the borrowing — as painful as it is — but we know we don’t have a choice, even with federal cash, even with revenues,” he said.
Murphy said the opportunity to borrow puts the state in a much better place. And he said he’s hopeful that it will be accompanied by direct cash assistance from the federal government — something many states are after.
“I would assume, what I think anyone would assume, with this virus ravaging so many states, the probability of something happening is probably, sadly, for all the wrong reasons, going up,” he said. “But I can’t tell you how high, when or how New Jersey will be treated in that context. Those are all pieces that we’re very focused on.”
Even federal aid, Murphy said, may not be enough.
While new taxes were not part of the deal, Murphy said there needs to be a “smart discussion” on revenues.
Read more from ROI-NJ:
- Republicans pledge to ‘go to court’ to stop $9.9B borrowing plan
- Murphy on potential taxes: ‘Folks who have succeeded’ should help shrink inequities in N.J.
- Business leaders, think tanks on borrowing deal: Everything from ‘No concern’ for residents to ‘great deal’