NJ Lawmakers Approve $10B Borrowing Plan; Court Fight Next
TRENTON — Gov. Phil Murphy quickly signed a bill passed by lawmakers Thursday that would enable the state to borrow nearly $10 billion to fill deficits in its operating budgets, setting the stage for a certain legal battle with Republicans who say that’s unconstitutional.
The law, formerly bill A4175/S2697, allows the state to borrow money either by selling general obligation bonds or through loans by the Federal Reserve. Before any bonds are sold, a new four-member legislative panel made up entirely of Democrats would have to approve.
Debates were lengthy and sometimes edgy in both houses, though with the Democrats’ large majority the outcome of the vote wasn’t really in doubt.
State Sen. Mike Testa, R-Cumberland, said Gov. Phil Murphy is salivating at the chance to borrow $10 billion and likened him to Gollum from "The Lord of the Rings" series begging lawmakers for that power.
“The borrowing authorized in this bill amounts to letting the governor give a giant middle finger to the taxpayers of this state,” Testa said.
“Why are we doing this now?” said state Sen. Declan O’Scanlon, R-Monmouth. “Because it would be great to have a $10 billion slush fund to get us through the next several budget cycles so we can avoid making the tough decisions we all know eventually are going to have to be made.”
“It’s time to stop this penny ante picking, criticizing,” said state Sen. Dick Codey, D-Essex, a former governor and ally of Murphy. “I mean: Blizzards, hurricanes, floods, they’re pieces of cake for a governor. This? This is totally out of it. Totally.”
The Senate passed the bill 22-15. Democrats voted yes, except for state Sens. Dawn Marie Addiego, D-Burlington, and Nia Gill, D-Essex. Republicans voted no. Three senators were absent: Vin Gopal, D- Monmouth, James Holzapfel, R-Ocean, and Steve Oroho, R-Sussex.
The Assembly passed the bill 46-26 in a party-line vote. Six Democrats were absent – Ralph Caputo, D-Essex, Angelica Jimenez, D-Hudson, Pamela Lampitt, D-Camden, Shavonda Sumter, D-Passaic, Britnee Timberlake, D-Essex, and Cleopatra Tucker, D-Essex – along with two Republicans, Kevin Rooney, R-Bergen, and Parker Space, R-Sussex.
“This is outrageous,” said Assemblyman Hal Wirths, R-Sussex. “We all want to be in the history books. Believe me, today you’re going to be in the history books. You’re going to be in the history books as one of the worst votes taken in the state of New Jersey, putting people in $10 billion worth of debt.”
Assemblywoman Eliana Pintor Marin, D-Essex, said she doesn’t want to make history through a bill increasing state debt by more than 25% but does want to as chairwoman of the Assembly Budget Committee through a fiscal and health crisis.
“But I do want to make history at making sure that the state of New Jersey is not devastated, that our families every day have a piece of bread and something to drink at the table,” Pintor Marin.
Some Republicans said the Legislature could avoid a constitutional crisis by putting the question to voters to decide in a November referendum. Assemblyman Jay Webber, R-Morris, said it’s “patently unconstitutional” to count borrowed funds as annual operating revenues, even in an emergency.
“I don’t think the attorney general knows how he’s going to deal with this. I think the governor’s plan is try to borrow the money and hope that a court bails us out,” Webber said.
Assemblyman John McKeon, D-Essex, said New Jersey borrowed money through general obligations bonds to balance its budget during the Civil War and Great Depression. Both of those, however, were before the current constitution was adopted in 1947.
“The only arbiter of this that’s going to matter is the New Jersey Supreme Court,” McKeon said. “And Minority Leader (Jon Bramnick), the reason why we need to move on this now sooner than later is invariably, your party, the party of no, is going to run to the courts. And we don’t have the time.”
The New Jersey Republican State Committee and the leadership political action committees for the Senate and Assembly say they will file suit in state Superior Court after Murphy signs the bill into law.
“Gov. Murphy and his Democrat co-conspirators recklessly chose the short-term sugar high of more borrowing and debt over the long-term interests of New Jersey and its residents,” the groups said in a statement attributed to GOP state chairman Doug Steinhardt, Oroho and Bramnick.
The bill allows $2.7 billion to be borrowed for the extended fiscal year that ends Sept. 30 and $7.2 billion for the 9-month fiscal 2021 that begins Oct. 1. Murphy said the state will borrow only what is needed to speed New Jersey's pandemic recovery. Republicans predict all $9.9 billion will wind up borrowed, unless courts block it.
Murphy said Wednesday that he would sign the bill “pretty much as soon as it gets here” – and made good on that, announcing he had signed it into law less than three hours after its passage.
“The passage of this legislation is an important step in New Jersey’s recovery from the economic ravages of the COVID-19 pandemic,” 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.”
Murphy will detail the proposed 2021 budget in a speech to the Legislature on Aug. 25.