Saying it will allow the Legislature to be both responsive to public needs and responsible to public finances, the Senate Budget & Appropriations Committee on Tuesday approved a bill authorizing the state to borrow up to $9.9 billion with the consent of a legislative panel to address the financial crisis created by the coronavirus outbreak.
The bill will be taken up by the full Senate on Thursday, where it appears certain to pass. Whether it will pass any potential legal challenge — which the Republicans have threatened — remains to be seen.
Sponsored by Senate President Steve Sweeney (D-West Deptford) and Sen. Paul Sarlo (D-Wood-Ridge), the bill (S-2697/A-4178) would create the “New Jersey COVID-19 Emergency Bond Act,” which would authorize bond borrowing of up to $2.7 billion for the remainder of fiscal year 2020, which ends Sept. 30. It also enables the state to borrow up to $7.2 billion for 2021, which begins Oct. 1.
“The pandemic is a public health emergency that has caused crisis economic conditions for almost every business, each individual and all levels of government,” Sweeney said in a release.
“This will give us the ability to provide emergency financing to maintain vital public services, to support essential workers and to help those in need. It also creates a four-member legislative panel to provide a ‘check’ on borrowing, so we don’t create unmanageable debts that could cause future economic damage. We want to be responsive to the needs, but we also have to be responsible with public finances.”
The state’s top business groups both voiced opposition to the bill during testimony (see full story here).
Laura Gunn, director of government relations at the New Jersey Chamber of Commerce, said she fears the borrowing will eventually come back to the business community in the form of taxes.
“It seems any time the state needs to find a revenue stream, it taps the business community,” she said. “These last few months have decimated employers across our state. It would be inappropriate and cruel to go after these businesses that were forced to significantly restrict their operations or close their doors completely for months.”
Sarlo, the chairman of the committee and the person who will join Sweeney — and two members of the Assembly — on the Select Commission on Emergency COVID-19 Borrowing, said the bill is necessary to keep the state going.
“We must keep New Jersey’s economy moving and we have to continue to provide the government services that are so important during the pandemic,” he said. “While we understand the need for emergent financing to help with the economic recovery, we still have to be responsible with added debt. This is uncharted territory, so we have to monitor fiscal conditions as we make decisions on borrowing.”