NJ freezes $920M in spending, including property tax credits
TRENTON — The Murphy administration has frozen more than $920 million in planned spending in the current state budget, girding for the upheaval to the state budget anticipated due to the novel coronavirus.
The state Treasury Department disclosed that it had put the appropriations into reserve on Friday as part of a voluntary disclosure statement to bondholders. It says it “expects precipitous declines” in tax collections this fiscal year and next and will need to make significant changes to spending and revenue projections in both budgets.
The biggest item on the list of reserves is $142 million for the property tax credits paid through the homestead benefit program that were due to be applied to May 1 bills. The state is telling towns it can’t support the credits at this time and will reimburse them if they issue revised tax bills to residents.
“We did not make this decision lightly, but right now given the impact this emergency is having on our economy, it is the right decision to protect our state’s fiscal stability,” Gov. Phil Murphy said.
Murphy said he met Monday afternoon for an hour with Senate President Steve Sweeney and Assembly Speaker Craig Coughlin to begin discussing the state budget process. Asked specifically whether school aid for the 2020-21 budget might be revised, Murphy said that’ll be “clarified further by the treasurer.”
“This is something that shouldn’t come as a surprise to anybody. We’re trying to trim our sails in a very challenging time. But more details to come,” Murphy said.
Murphy said the details of the current and upcoming state budgets depend on what is in the final legislation being worked on by Congress.
“I cannot stress this enough, that New Jersey and our residents need the assistance not just to see us through the current emergency but to ensure that the vital state programs that will help us emerge on the other end of this will not be compromised,” Murphy said.
Murphy said it’s his understanding the bill being finalized in Congress would include more than $200 billion to be shared by the states for unemployment insurance, direct aid to states, hospitals and mass transit, support for small businesses and community development block grants.
“Fingers crossed. If those elements in particular in large scale remain parts of what is ultimately agreed upon, voted on and signed by the president, that’s good news. In the midst of an incredibly challenging world right now, that would be good news,” Murphy said.
“If stays in that neighborhood, that is a huge jolt to the economy,” he said.
The Trump administration has already said it will cover 100% of the costs state incur associated with activating the National Guard to deal with the coronavirus in designated states. New Jersey has asked to be included.
The Treasury Department said it expects significant reductions in income tax, corporate business tax, sales and casino tax revenues due to required business shutdowns, as well as gas taxes because of Murphy’s "stay at home" order. It said lottery sales have already started to decline.
The state also said future contributions to the state pension plans recommended by actuaries may rise if the funds’ values deteriorate along with the stock market.
A full list of the spending items put into reserve is available on the Treasury Department’s website.
Michael Symons is State House bureau chief for New Jersey 101.5. Contact him at email@example.com.