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TRENTON – Gov. Phil Murphy pushed for legislative authorization to borrow billions to offset the loss of revenue the state incurred or expects as a consequence of the pandemic.
The bill, as approved by the Legislature, gives the state the ability to borrow up to $9.9 billion, with conditional approval from a four-member legislative committee. The borrowing would not require bringing the matter directly to the state’s voters.
Almost immediately, the state Republican Committee challenged the bill in court. The state Supreme Court heard arguments in the case Aug. 5. The challenge questions how the money might be used and whether the pandemic emergency provides an appropriate reason for allowing large scale borrowing without bringing the matter to the voters.
The bill under debate in the courts passed the Legislature only after it was stripped of provisions that would’ve allowed municipalities to participate in borrowing for their COVID-19 induced revenue shortfalls. To allow for borrowing by municipalities, a second bill was adopted, in Trenton, which the governor conditionally vetoed.
In his conditional veto, Murphy argued that the repayment period should be lowered from 10 years to five years. He also objected to removing the borrowing from the framework of “existing financial mechanisms” of the state, impacting certain flexibilities intentionally included in the bill.
Two months before the state must adopt a nine-month budget for the remainder of the fiscal year 2021, the two bills intended to provide borrowing capability are under challenge.
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