SOMERVILLE, NJ - Declared gubernatorial candidate Jack Ciattarelli has filed a lawsuit against Gov. Phil Murphy, hoping to block his plan to borrow $9.9 billion to balance the state's budget.
Murphy says he has the authority to do so; Ciattarelli, who is seeking the GOP nomination to run against Murphy in 2021 says it is unconstitutional, and has been threatening to take Murphy to court over the borrowing plan since April. Murphy issued an executive order July 16th authorizing the state to borrow the money after the Democratic-controlled State Senate and Assembly went along with the plan.
Big mistake, Ciattarelli said, citing a 2004 New Jersey Supreme Court decision that blocked then-Gov. Jim McGreevey from borrowing $2 billion to balance the state budget. The justices voted 4-1 against McGreevey.
"That is a very powerful precedent," Ciattarelli said.
The plaintiff in the 2004 cases was then state Senate Minority Leader Leonard Lance; the Hunterdon County Republican went on to serve five terms in the House of Representatives before he was defeated for re-election in 2018 by Rep. Tom Malinowski, D-7th.
Ciattarelli released a prepared statement and YouTube video Monday concerning the lawsuit:
"As promised, I am now challenging Governor Murphy’s reckless $10 billion borrow & tax scheme in court. This borrowing is irresponsible, unnecessary and unconstitutional. If allowed to happen, it will mean higher taxes and an even less affordable New Jersey for generations to come.
"With my participation in this lawsuit, the legal team now includes my campaign attorney, Mark Sheridan, who successfully argued the Supreme Court case against Governor McGreevey’s unconstitutional borrowing in 2004.
"Assemblyman Jay Webber, (R-Morris), who worked in partnership with Mr. Sheridan on that case, has also agreed to join us as both attorney and plaintiff. I am grateful for their participation and confident that we have the best team on the field.
"More state debt is terrible fiscal policy. More state debt is a violation of taxpayers. And more state debt to balance our state budget is an unconstitutional act that demands a Supreme Court challenge, which is exactly what the Governor now has.
"We’ll see him in court. We believe our argument is too compelling for the Supreme Court to ignore," Ciattarelli said. "We are fully confident the Supreme Court will allow us to make our case."added.
Ciattarelli, a former state Assemblyman, Somerset County Freeholder and resident of Hillsborough, expects the case will be expedited with a decision as early as Aug. 5th.
"The briefs have been submitted; if accepted, my attorney will make the argument before the Supreme Court; at that time the justices can ask any and all questions they have," Ciattarelli said. . . .
In April, Webber told Insider NJ: "Borrowed funds cannot be used as income to balance the state budget. The state Supreme Court in Lance vs. McGreevey has already looked at this and given all the guidance we need."
The “New Jersey COVID-19 Emergency Bond Act,” was signed into law by Murphy on July 16th. It authorizes the state to borrow up to $9.9 billion to address the fiscal crisis that has arisen as a consequence of the COVID-19 pandemic.
“The passage of this legislation is an important step in New Jersey’s recovery from the economic ravages of the COVID-19 pandemic,” Murphy said. “While this is by no means a silver bullet, the ability to responsibly borrow is essential to meeting our fiscal needs in the coming year.”
Under the law, the state has the authority to issue bonds totaling $2.7 billion for the remainder of the extended Fiscal Year 2020, which runs through Sept. 30, 2020, and up to an additional $7.2 billion for the nine-month Fiscal Year 2021 that runs from Oct. 1, 2020 through June 30, 2021, for a combined amount of up to $9.9 billion to be issued over the two periods.
The state is authorized to borrow either through the issuance of general obligation bonds that can be sold to investors or through the federal government’s Municipal Liquidity Facility, which was established to help states and local governments across the country deal with the fallout from the global pandemic. The State is also authorized to refinance bonds issued pursuant to the bond act.
Debt service on this bond issuance will be repaid through the state’s General Fund.
Murphy stressed that the state plans to borrow only what is necessary to speed New Jersey’s economic recovery.
“The current economic crisis is virtually unprecedented in both its severity and swiftness,” Murphy said. “Our unemployment numbers and drop in revenue have both far outpaced the worst months of the Great Recession so while we see this bill as an important step, our ultimate recovery will depend on a number of factors including additional federal aid and savings within state government.”
The law also establishes the Select Commission on Emergency COVID-19 Borrowing, comprised of two members of the Senate selected by the Senate President and two members of the General Assembly selected by the Speaker of the General Assembly, which must approve any proposal to issue bonds prior to their issuance.
Ciattarelli ran unsuccessfully in the Republican Gubernatorial Primary in 2017 against former Lt. Governor Kim Guadagno, winning endorsements from the Republican committees in seven of the state's 21 counties. Guadagno captured 47 percent of the GOP vote, Ciattarelli, 31 percent. She lost the general election to Murphy.
On Jan. 21, the 58-year-old kicked off his second campaign seeking the Republican nomination to run against Murphy in the 2021 election. He made his formal announcement at the Eisenhower Elementary School in Raritan, which he attended. In later years, he got his start in politics as a member of the Raritan Borough Council.
Ciattarelli's campaign office is on West High Street in Somerville.
Link to YouTube video: