On Tuesday, July 14, the state Senate Budget and Appropriations Committee voted 8-3 along party lines to approve a bill, S-2697/A-4178, which paves the way for the state to borrow up to $9.9 billion. The borrowing is intended to fill budget holes for this year and fiscal year 2021 created by revenue losses due to the pandemic.
The bill, sponsored by Senate President Steve Sweeney and Senator Paul Sarlo, would create the “New Jersey COVID-19 Emergency Bond Act,” which would authorize bond borrowing of up to $2.7 billion for the remainder of fiscal year 2020, which ends Sept. 30, and up to $7.2 billion for fiscal year 2021, which begins Oct. 1.
The bill reflects an agreement reached by Gov. Phil Murphy and the legislative leadership four days earlier.
A-4175, the original bill, was passed by the Assembly in a party line vote on June 4. That bill authorizes the state to sell $5 billion in general obligation bonds as well as borrow from the federal government.
Under the new agreement, state borrowing would be limited to $9.9 billion. It is not currently clear how much of that will be from selling bonds and how much will be borrowed from the federal government. All borrowing, however, will have to be approved by a special four-member committee comprised of two Senators and two Assembly members.
Republican leaders have voiced their objection to the state taking on more debt. Several have raised constitutional questions over the borrowing proposal. If enacted, this proposal will most likely end up before the courts before borrowing can commence.
The billis scheduled for consideration by the full Assembly and Senate on Thursday, July 16.