TRENTON, NJ - Although second quarter revenues aren't due until July 19th, the NJ State Assembly voted today to borrow at least $5 billion dollars to fund operational expenses for the state in anticipation of a projected and significant revenue shortfall.
Speaker Craig Coughlin whipped 100% of the votes of the Democratic Assembly into voting yes on bill A-4175. It now heads to the State Senate for approval.
Assembly Republican Minority Leader Jon Bramnick, delivered a unanimous 'No' vote from his entire caucus.
The Chair of the Assembly Budget Committee, Eliana Pintor Marin, a Democrat from Newark, stated to the General Assembly, "The historic nature of the current pandemic has led to this unprecedented last resort due to the current fiscal crisis.”
Republicans weren't in agreement. Earlier in the day, Assembly Leader Bramnick and Assemblyman Jay Webber hosted an online press conference where they issued statements and answered questions.
Bramnick asked the reporters to question the Murphy administration on how they could inflict to homeowners what was akin to an unauthorized second mortgage on homes throughout the state, without telling them how much the surplus on their property tax bill would be.
Webber and Bramnick both stated that this bill was unconstitutional.
Webber specifically referenced article 8, section 2, paragraph 2 of the NJ Constitution. This is the appropriation's clause that requires a balanced budget. This paragraph specifically states that the state can not spend more than it takes in. The Assemblyman also reminded listeners that, "We have experienced similar situations like this in years past. For example, the Christie administration tackled these problems without taking on debt post the 2008 market crash".
The last time a similar borrowing bill was passed, former Assemblyman Alex DeCroce and former Congressman Leonard Lance sued then Governor Jim McGreevey on the same issue of borrowing money to balance the budget. The court agreed with DeCroce and Lance.
In admitting that the plan to borrow funds was not an ideal one, Speaker Coughlin stated, “The coronavirus pandemic represents the greatest public health and economic challenge we have faced since the Great Depression, nearly a century ago,” Coughlin also cited State Treasurer Elizabeth Muoio’s estimate that the loss of revenue will exceed $10 billion. “Our residents face record unemployment, loss of business and difficulty in paying rents and mortgages. The middle class is struggling to make ends meet.”
“I support the borrowing of necessary funds through bonding, provided the sacrifice is spread evenly and that proper Legislative oversight is included, to ensure our economic position is strengthened for both the present and future,” Speaker Coughlin stated.
The Republicans expressed their intention to immediately file a lawsuit.
Morris County Legislators spoke out loudly against the bill.
Assemblywoman BettyLou DeCroce said "Bonding to balance the state budget for operational costs is unconstitutional and wrong. In all my years of working in government, no municipality has been allowed to bond for those costs. The voters have a constitutional right to vote on a referendum of this depth. $5 billion dollars is an amount of money the tax payers should decide. We should cut the budget instead. NJ's residents can not afford higher taxes after COVID-19 which is why I voted no".
Assemblyman Brian Bergen was also a passionate no vote. "The notion that, as a legislative body, we would completely disregard the state constitution is mind boggling to me. We cannot borrow money to balance our budget. There is plenty to cut and that is where we need to start."
Assembly Majority Leader Louis Greenwald said that the state has no other option. “New Jersey’s nine million residents were our only concern today. Staving off property tax increases, supporting education for our children and helping local governments and businesses recover was our only objective with this bill,” Greenwald said. “Securing this funding will help the State meets its obligations to our schools, higher education institutions, municipalities, hospitals and, most importantly, to residents who are struggling as a result of the effects of the pandemic.”
"We are here today to vote on a bill that allows our fiscally embattled state to add billions of dollars in new debt, push out payments for as long as 35 years from now and could create a new statewide property tax," Assemblywoman Aura Dunn of Morris County said just before the vote. "In other words, a bill left for my children, grandchildren and great grandchildren to pay. And that is only if they can even afford to live in this state."