TRENTON — Expecting a large decline in anticipated revenue for this year and next due to shutdowns associated with COVID-19, the state Treasury Department on Monday froze $920.6 million in spending from the homestead benefit program to the Motor Vehicle Commission to college operating aid.
“The impact of COVID-19 on the state, its economy, and budget and finances is unpredictable and rapidly changing, but the state believes that events surrounding COVID-19 will negatively impact the state’s economy and financial condition,” state Treasurer Elizabeth Maher Muoio wrote in a financial disclosure statement issued to bondholders Monday.
The new coronavirus outbreak has led to the shutdown of casinos and all other nonessential businesses and resulted in the governor ordering residents to stay in their homes under most scenarios, meaning a significant reduction in revenues from gross income tax and corporate business taxes, as well as sales tax, gasoline taxes, casino taxes and lottery sales.
In his daily press briefing, Gov. Phil Murphy said Tuesday the decision to freeze the discretionary spending was not made lightly.
“But, right now, given the impact this emergency is having on our economy, it is the right decision to protect our state's fiscal stability,” Murphy said.
The largest spending item placed in reserve is funding for the Homestead Benefit credit, which provides property tax relief to eligible homeowners, usually in the form of a credit to the municipality.
Of the total frozen spending, the Homestead Benefit was $141.9 million. According to the Treasury, the state is in the process of notifying towns that any credits intended to be applied to May 1 bills can no longer be supported by the state at this time. The state will reimburse municipalities for costs to issue revised property tax statements.
Adding to the financial constraints is the expected extension of the state tax filing deadline from April 15. The federal government has already extended its tax filing deadline to July.
“It is likely that the full fiscal impact of COVID-19 on the state will change significantly as the situation further develops,” the disclosure statement reads. “The actual impact of COVID-19 on the state, its economy and its budget and finances will heavily depend on future events, including future events outside of the control of the state, and actions by the federal government as well as nations across the world.”
The state expects to revise the estimated revenues and projected appropriations for both this fiscal year and next.
Other appropriations impacted by the freeze include: