NJ to borrow $ 4.5 billion as pandemic pain hits states
The money would be offered in the form of loans, to be repaid with interest at the same rates the Fed now offers states. But if by June 30, 2022, borrowing governments could show that their budgets were “really balanced” and that they had sufficient funds for rainy days, the loans would be canceled and borrowers could keep the money.
In 2004, when former Governor Jim McGreevey, a Democrat, decided to borrow to allow for increased spending, he was for follow-up by Leonard Lance, a Republican member of the State Senate, who was later elected to Congress.
The state Supreme Court authorized the borrowing that year, but made it illegal to do so in subsequent budgets without voter approval.
This year, the Supreme Court cited the extraordinary health emergency and fiscal crisis caused by the coronavirus, which has claimed more than 16,000 deaths in New Jersey, when it paved the way for the loan to go forward.
New Jersey delayed approval of its fiscal year budget for three months at the start of the pandemic, passing a provisional measure of expenditure end of June. The budget that was approved Thursday, which is expected to be promulgated by Mr. Murphy, only covers nine months.
Mr. Lance, who lost his seat in Congress in 2019, said the state should have been allowed to borrow in the year the crisis erupted, but not in the year that begins Oct. 1.
“It is a terrible burden that will be borne by our children,” he said.
In August, more than 90 New Jersey economists and economic policy experts published a joint letter urging the state not to use what they called “counterproductive” cuts to balance the budget.