TRENTON — State revenues have “fallen off a cliff” in light of the COVID-19 pandemic, and the Murphy administration is proposing $5 billion in cuts, deferred payments and other budget-tightening measures, Treasurer Liz Muoio said Friday.
The $5 billion in cuts come on a roughly $40 billion budget overall.
The coronavirus outbreak has clobbered state finances, with income tax receipts falling 5%, sales tax revenues dropping 11% and business taxes declining by nearly 12% for the current fiscal year, Muoio said. The projected declines are steeper for the fiscal year that starts Oct. 1.
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“This report is designed to serve as a road map to help New Jersey begin to navigate what is essentially uncharted territory. We are not alone. All across the country, states are facing similar challenges that seemed inconceivable just a few short months ago,” Muoio said. “As a state, we had made great strides over the last two years to improve our fiscal condition. However, the global pandemic sparked by COVID-19 has halted this progress in its tracks. Managing this unprecedented fiscal crisis will require extremely difficult decisions in the weeks and months ahead, and will necessitate a combination of budget and appropriation adjustments, critically needed borrowing and more robust federal assistance.”
Because of a constitutional requirement to enact a balanced budget, Gov. Phil Murphy is proposing cuts for the current year. Among them are $336 million in K-12 aid to schools, $132 million for NJ Transit and $80 million in lead infrastructure spending.
Because of the pandemic, the Democrat-led Legislature and Murphy have extended the fiscal year from June 30 to Sept. 30.
“As we work toward our new Sept. 30 FY2021 state budget deadline, we face an enormous challenge in balancing our wants and needs,” said Murphy. “Revenue losses we can already project are drastic. We need a series of deliberate and responsible measures in place.”
Murphy has also called on federal lawmakers to provide assistance.
“We need Washington to step up with significant direct fiscal assistance for states. Every day, this becomes a more and more bipartisan endeavor,” Murphy said. “But there are just as many minds that remain closed and intractable. One of those closed minds controls the Senate agenda.”
He’s referring to state Senate Majority Leader Mitch McConnell, R-Ky., who at one point suggested states should consider declaring bankruptcy.
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Murphy also wants to delay payments. The biggest among them is a $1 billion payment to the public pension fund that moved from September to October under the proposal Muoio outlined Friday.
“We’re approaching a fiscal cliff. We have two choices: toss our state into the abyss or take measures that will allow us to slowly back away from the edge and keep our feet on solid ground,” Murphy said.