Gov. Phil Murphy has signed the New Jersey COVID-19 Emergency Bond Act, which 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. Earlier in the day, the Senate passed the bill with a 22-15 vote. The Assembly voted on and approved the Senate version of the bill a few hours later (46-26).
The deal was struck last Friday between Senate Democrats and the governor.
“The passage of this legislation is an important step in New Jersey’s recovery from the economic ravages of the COVID-19 pandemic,” Governor 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 September 30, 2020, and up to an additional $7.2 billion for the nine-month Fiscal Year 2021 that runs from October 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.
Two days ago, the New Jersey Business Coalition, which includes more than 100 leading business and nonprofit groups, released a statement detailing its dismay of the bonding:
“We are deeply concerned about New Jersey’s ability to withstand the consequences of the proposed borrowing. … There is no doubt that New Jersey will require additional resources during this COVID-19 crisis. To address this, we need a comprehensive fiscal strategy that includes all tools at our disposal. Absent that, any plan for borrowing now is premature.
“New Jersey was already at the fiscal cliff prior to the COVID-19 crisis. New Jersey’s debt per capita is already sixth highest in the U.S. Further borrowing now will only exacerbate our role as a state lacking affordability and regional competitiveness, let alone the half a billion dollars of new financial strain this will place on New Jersey residents annually for generations to come.”
The bill will allow the state to borrow roughly a quarter of its annual budget. Taxpayers could be responsible for repaying the funds over as many as 35 years.
To access more business news, visit NJB News Now.Related Articles: