Senate Republicans Inform Murphy They Will Not Support His Borrowing Proposal

Say the Governor’s Plan to Borrow as Much as $14 Billion Is Premature, Excessive & Unconstitutional

The fifteen members of the Senate Republican caucus sent the following letter (click here for PDF) to inform Governor Phil Murphy that they will not support legislation he has proposed to allow his administration to borrow as much as $14 billion, warning the proposal is premature, excessive, and unconstitutional.

The full text of the letter is below:

June 10, 2020

Dear Governor Murphy,

We write to inform you that our caucus will not support legislation you have proposed which would authorize your administration to borrow as much as $14 billion to address revenue shortfalls resulting from the economic impact of COVID-19. We believe this proposal is premature, excessive, and unconstitutional.

We are extremely concerned that the measure (A-4175) is being advanced prior to any reasonable effort to implement fiscal restraints of the magnitude required by the situation. Our caucus, the Legislature, and other parties have offered a number of responsible solutions that you have ignored that would allow the State to reduce spending that is unnecessary or unjustified at this time and to increase revenues without tax increases.

Further, we must question the certainty of the $10 billion figure your administration has cited as the revenue shortfall that must be filled. That estimate was based on the New Jersey economy remaining in near-total lockdown through June, which has not occurred.

Additionally, we believe the quicker pace of reopening that we requested that is now being implemented will further limit revenue losses. The federal jobs report for May shows the aggregate addition of 2.5 million jobs nationally as other states took the lead in removing unnecessary restrictions, allowing their businesses to reopen and rehire employees. Their example demonstrates how New Jersey’s economy and the State’s tax revenues may begin to recover as the remaining restrictions imposed through your executive orders are lifted. The longer restrictions are sustained, however, the less likely a full and speedy recovery for New Jersey becomes as more of our businesses will suffer irreparable financial harm and close permanently.

Finally, we do not believe it makes sense to advance any borrowing proposal before we get a full accounting of the billions in tax payments that will be realized by July 15th, the extended deadline for individual gross income, partnership, and corporate business taxes to be filed and paid. After that date, we will have a substantially improved picture of the State’s fiscal situation and actual need, well in advance of the September 30th budget deadline. We will have two-and-a-half months to make well-informed decisions based on real data, which you have indicated in other matters to be a favored approach.

Your administration’s premature rush to bond billions absent this critical information and prior to implementing responsible fiscal restraints leads to the inevitable conclusion that borrowing is being pursued as a matter of preference rather than as a last resort after all other options have been exhausted. The legislative record further reflects that this effort to borrow is a choice rather than a necessity in the Assembly debate for A-4175 when a supporter of the legislation stated clearly that the purpose of the bill is to avoid “cuts to programs.”

We are compelled to remind you of the New Jersey Supreme Court’s ruling in Lance v. McGreevey that bonding in this manner is unconstitutional. With regards to A-4175, specifically, legislative counsel at the Office of Legislative Services has advised that borrowing authority under the New Jersey Constitution is far more limited than what you have proposed.

Given these many concerns, our caucus will not support this irresponsible effort to saddle New Jersey taxpayers with billions in debt for the next 35 years. We urge you to change course and pursue fiscal restraint as your primary strategy to achieve a balanced budget for the upcoming year as our constitution requires. In that pursuit, we remain ready to help.

Sincerely,

Thomas Kean
Leader

Steven Oroho
Budget Officer

Kristin Corrado
Conference Leader

Joe Pennacchio
Whip

Robert Singer
Deputy Leader

Chris Brown
Deputy Conference Leader

Kip Bateman
Deputy Whip

Anthony M. Bucco
Senator – District 25

Gerald Cardinale
Senator – District 39

Christopher Connors
Senator – District 9

Michael Doherty
Senator – District 23

James Holzapfel
Senator – District 10

Declan O’Scanlon
Senator – District 13

Michael Testa
Senator – District 1

Samuel Thompson
Senator – District 12