Billions in Spending Increases Proposed Before Crisis Remain Unchanged While Emergency Programs to Keep People Employed Run Dry Within Minutes

The Republican members of the Senate Budget & Appropriations Committee called on Governor Phil Murphy to announce which of the billions of dollars in new programs and spending and school aid increases he proposed in February will be scaled back to better fund emergency programs that are critical to helping small businesses survive and hundreds of thousands of New Jerseyans to stay employed.

They noted that the Governor’s budget, which was proposed before the economy was shut down, has become unrealistic because, as the Governor himself has said, “revenues have fallen off a cliff,” while the State has new obligations to help businesses and people impacted by COVID-19. As a result, schools, municipalities, and those promised increased State support in February must be leveled with by the Administration that some of the increases originally promised prior to the crisis are now impossible, giving them the opportunity to plan accordingly.

“We passed a bill Monday that I sponsored which extends the State fiscal year by several months to give us more time to understand our overall revenue picture and emergent needs in light of rapidly changing fiscal conditions,” said Senate Republican Budget Officer Steven Oroho (R-24). “Unfortunately, some of our most important fiscal decisions must be made immediately, including school aid allocations when local budgets must soon be adopted and funding for small businesses that may not survive much longer without substantial new assistance from the State.”

A pair of underfunded small business emergency assistance programs offered by the New Jersey Economic Development Authority were oversubscribed almost immediately after the applications went live.

As tens of thousands of businesses rushed to apply, the NJEDA’s $5 million Small Business Emergency Assistance Grant Program ran out of money within an hour of launching on April 3rd. Similarly, the Authority’s $10 million Small Business Emergency Assistance Loan Program was out of cash within 30 minutes of launching Monday morning.

“When New Jersey’s emergency small business assistance programs are running dry within minutes of launching, it’s clear that we’re going to face an avalanche of bankruptcies and new unemployment claims if we don’t fund those programs better,” said Senator Declan O’Scanlon (R-13). “Add in the other myriad unexpected costs and massive revenue shortfalls and it’s obvious the Governor needs to change course from what he proposed before the crisis hit. He can’t wait until after school boards and others have adopted budgets in May and otherwise made plans based on his earlier proposal, and then pull the rug out from under them later. We need communication and transparency on these fronts now.”

For example, they highlighted that more than 300 school districts continue to craft budgets and will pass budgets in May based upon the Governor’s proposed State aid increases that reach as high as 44%. It is unlikely the State will have the resources to honor those proposed increases in full while simultaneously helping all of those who are suffering and getting the economy running again.

“I’ve been a leading advocate for increasing State school funding as a means of providing property tax relief, but it makes no sense during this crisis to forge ahead with increases that are as large as 44% when hundreds of thousands of New Jerseyans are losing their jobs and the programs to prevent job losses are out of money,” said Senator Sam Thompson (R-12). “Consider that the total amount of emergency business grants made available through the NJEDA for all of the hundreds of thousands of small businesses in New Jersey is 30 times less than the school aid increases going to fewer than ten school districts.”

Under revised school budget deadlines provided by the New Jersey Department of Education, districts are set to begin public budget hearings in the coming days, with budgets to be adopted in May.

“We all support the needs of our students, teachers, and towns, but it’s irresponsible to let them advance the adoption of local budgets built upon huge increases in State aid that we cannot afford,” added Senator Michael Testa (R-1). “Some of those increases weren’t justifiable before COVID-19, and they certainly aren’t today when many thousands of families are set to lose their paychecks due to underfunded programs that could help employers stay in business. If the administration doesn’t act immediately to shift funds to where they are needed, we are likely to see economic harm that New Jersey hasn’t witnessed since the Great Depression.”