17 Essex County Mayors Say Murphy Should Borrow $9B For NJ Budget

ESSEX COUNTY, NJ — A group of 17 mayors and the Essex County executive have issued a strong call of support for Gov. Phil Murphy’s proposal to borrow $9 billion from the U.S. Federal Reserve to help cover a huge, looming state budget gap.

Last week, Murphy’s administration announced the state is potentially facing a revenue shortfall of nearly $10 billion through the end of fiscal year 2021 due to the coronavirus outbreak.

It’s a potential financial crisis that would be worse than the Great Recession, officials said.

• See related article: NJ Proposes Massive Budget Cuts To Weather COVID-19 Crisis
• See related article: NJ's $1.2 Billion Budget Surplus Plan Is Victim Of Coronavirus

On Friday, Essex County Executive Joseph DiVincenzo Jr. and more than a dozen mayors in the county sent a letter to Murphy, throwing their weight behind his plan to borrow from the Federal Reserve.

According to DiVincenzo, if New Jersey officials need to start making big cuts from the budget – which may include layoffs – counties and municipalities will feel a trickle down effect because of their reliance on state grants and other revenue support.

Other officials who signed the letter included Belleville Mayor Michael Melham, Bloomfield Mayor Michael J. Venezia, Caldwell Mayor John Kelly, East Orange Mayor Ted R. Green, Glen Ridge Mayor Stuart K. Patrick, Irvington Mayor Tony Vauss, Livingston Mayor Rudy Fernandez, Maplewood Mayor Frank McGehee, Millburn Mayor Jackie Benjamin Lieberberg, Montclair Mayor Robert D. Jackson, Newark Mayor Ras J. Baraka, Nutley Mayor Mauro G. Tucci, Orange Mayor Dwayne D. Warren, Roseland Mayor James Spango, South Orange Village President Sheena C. Collum, Verona Mayor Jack McEvoy and West Orange Mayor Robert Parisi.

The letter read:

"We are all aware that COVID-19 has had a tremendous impact on the physical health of our residents as well as the fiscal stability of New Jersey's finances. As the state stands to face a revenue shortfall of approximately $10 billion through the 2021 fiscal year, in addition to having to cover the unexpected expenditures necessary to continue combatting the coronavirus, it is imperative that the state find an alternate means to balance its budget. In the absence of support from the federal government, we believe the most prudent step to take is to borrow $9 billion to cover the shortfall."

The letter continued:

"One of the primary reasons we support your proposed borrowing plan is that the effects of the proposed cuts will drastically impact our ability to keep our staff working, provide much needed services to our constituents and operate government with a high level of efficiency and effectiveness from the county level and on the municipal level as well. This includes critical functions and essential employees, including police, fire, teachers and other government employees who provide supportive services to vulnerable populations. Essex County and our municipal partners are in agreement and fully support your proposed borrowing plan, as evidenced by their names on this letter."

New Jersey isn’t the only government agency considering a loan from the feds to help survive the COVID-19 crisis.

Earlier this week, the Port Authority of New York and New Jersey authorized management to apply for support from the Municipal Liquidity Facility, a new program created under the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act.

Port Authority officials hope the short-term fix can help the agency cope with an estimated $3 billion revenue gap from the COVID-19 outbreak.

• See related article: Port Authority Faces Huge COVID Cash Crunch, Seeks Short-Term Fix

NEW JERSEY BUDGET CUTS COMING?

According to a statement from Gov. Murphy’s office, at his direction, the Department of the Treasury has started taking steps to help weather the COVID-19 financial storm, including:

• Review of state spending across all branches of government and placement of approximately $1 billion of available appropriations into reserve
• Transfer of the entire $421 million Surplus Revenue Fund, also known as the Rainy Day Fund, to the undesignated General Fund balance to help offset the anticipated shortfall (in addition, the planned deposit on June 30, 2020 will not be made)
• Implementation of a statewide hiring freeze with the exception of COVID-19 related needs
• Ongoing review and approval by the Office of Management and Budget of department spending and contracting
• Cancelling and reserving of pre-encumbrances, which will result in deferral or elimination of planned department spending

Additionally, to help offset the anticipated billions in lost revenue, the administration is proposing “significant cuts” across nearly all sectors of government.

The Department of the Treasury is proposing to decrease planned spending by over $5 billion, including:

• $1.3 billion in proposed deappropriations
• $3.2 billion in cut or delayed first quarter appropriations
• Withdrawal of $849.7 million in proposed spending priorities put forth by the governor in February

READ MORE: NJ Coronavirus Updates (Here's What You Need To Know)

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