Murphy defends $ 4 billion loan, slams “Monday morning quarterback”
Govt. Phil murphy postponed Wednesday against critical that he acted prematurely by borrowing $ 4 billion to fill a budget hole planned last fall, saying, “We make decisions as we do based on the best information we have.”
The Democratic governor, ahead of his re-election this year, has defended the decision to borrow billions of dollars as the state faces yet another hike and the prospect of more lockdowns and has targeted Republican lawmakers, who , in hearings Tuesday and Wednesday, criticized the loan as hasty and unnecessary.
“I haven’t heard that many quarterbacks on Monday morning since Howard Cosell retired,” Murphy said. “With all due respect, we did what we thought we had to do and will continue to do every day we come to work.”
In response to questions from journalists from his coronavirus briefing in Trenton, Murphy argued that the pandemic and political unrest at the time left the prospect of federal aid – and with it, New Jersey’s finances – extremely uncertain.
“I think we sold the bonds on November 18, if I’m not mistaken,” he said. “So what was the world like then?” Donald Trump said he had won the election and that he was going to plead this both literally and figuratively until inauguration day. We had two runoffs in Georgia that hadn’t happened before January 5th. And you had an avowed Republican caucus leader, Mitch McConnell, saying there would be no chance there would be state and local aid.
In a pair of budget hearings, Treasurer Elizabeth Muoio made a similar case that borrowing was prudent given the uncertain outlook for government tax collections. The Treasury forecast a shortfall of $ 4.3 billion in the fiscal year ending June 30 when it sold the bonds in mid-November.
Thomas Koenig, the revenue and finance office of the non-partisan Office of Legislative Services, weighed in this week, showing lawmakers the revenue and spending projections that led to loan were defensible at the time, but “from today’s perspective borrowing was not essential.”
New Jersey treasury officials and economists across the country have warned of a total collapse in state and local government tax collections last spring. For his part, Murphy said that in the first weeks of the pandemic, New Jersey’s loss of revenue could reach $ 20 billion or $ 30 billion.
Thanks in large part to federal stimulus efforts that kept money flowing through the economy and the fact that low-wage workers, who pay relatively little in state income tax, suffered the most. job losses, the income picture is much brighter.
Tax collections have made a big comeback, with Murphy in February raising his forecast for this year by $ 3.2 billion. And the Garden State is expected to receive $ 6.4 billion in federal aid, as part of President Joe Biden’s $ 1.9 trillion stimulus package.
“It would have been possible, perhaps wise … to wait until we actually needed the money,” Senator Declan O’Scanlon, R-Monmouth, said during the Senate budget hearing on Tuesday. “And if we had done that, we would have found out that we never needed the money.”
President of the Senate Stephen sweeney, D-Gloucester, also said he regretted the loan rush.
“If you had had a crystal ball and had to start over, we would have waited,” he told NJ Advance Media last month.
But Muoio argued that the improving outlook only became clear after the estimated quarterly tax payments in December, and that waiting to borrow would have been too great a risk.
The governor is under pressure from lawmakers on both sides to use some of the state’s windfall to pay off some of the state’s remaining $ 44.4 billion in bond debt.
While seeking legislative authorization to borrow last year, Murphy assured it would seek to reduce the state’s debt if tax collections rebounded or if the federal government arrived with more help.
“New Jersey’s long-term debt has always been a fiscal albatross. If we have the opportunity to do something about it, we should, ”Senator Paul Sarlo, D-Bergen said on Tuesday.
Thank you for relying on us to provide journalism you can trust. Please consider supporting NJ.com with a subscription.