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Supreme Court clears borrowing bill

In unanimous decision, justices affirm state’s right to emergency borrowing

By Nikita Biryukov, August 12 2020 12:04 pm

The New Jersey Supreme Court unanimously ruled a bonding proposal backed by Gov. Phil Murphy and Democratic leaders in the legislature did not violate the state constitution Wednesday, handing a defeat to the state’s Republicans, who sued in an attempt to strike the bill allowing New Jersey to borrow up to $10 billion over the next year.

“The Court concludes that the Act is valid under the Debt Limitation Clause and that the Appropriations Clause does not bar the new law,” Chief Justice Stuart Rabner wrote in the court’s opinion.

The court’s decision did impose some limits on borrowing. Namely, the court ruled that, to prevent an excess of borrowing, the $9.9 billion borrowing cap would be lowered if revenue projections improve.

The decision requires Murphy or Treasurer Elizabeth Muoio certify the state’s projected revenues and the pandemic-related revenue shortfalls before each instance of borrowing.

“The State may not borrow more than the amount certified, and not more than $9.9 billion in total. In other words, if, at the time the State seeks to borrow money or issue bonds, the Governor or the Treasurer certifies that the shortfall resulting from the pandemic is estimated to be $7 billion, the State cannot borrow more than that amount,” Rabner wrote.

Wednesday’s opinion puts an end to a bitter, if short-lived, fight over how to fund the state amid a pandemic that has sent the state into a fiscal tumble as it killed thousands of Garden State residents.

The Republican State Committee, led by State Chairman Doug Steinhardt, sued Murphy’s administration in an effort to kill the bill, claiming it was unconstitutional because it violated the appropriations and debt limitations clauses of New Jersey’s constitution.

The administration, meanwhile, argued that the borrowing passed constitutional muster because the pandemic constituted an emergency. Both the debt limitation and appropriations clauses included exceptions for emergencies, and the court ruled the pandemic met that bar.

Still, the borrowing won’t be allowed to proceed without oversight.

“To avoid borrowing in excess of what the law allows, and to be faithful to the Emergency Exception, the Court requires that the Governor or the Treasurer certify the State’s projected revenue figures and the shortfall resulting from the pandemic before each tranche of borrowing,” the court said.

Steinhardt and other Republicans party to the suit were less than thrilled with Wednesday’s decision.

“This decision confirms that all three branches of the New Jersey state government are firmly in the grasp of the Democrat Party,” Steinhardt said. “The only way to put an end to out of control spending is to send more Republicans to Trenton. While the State’s Democratic Supreme Court today took a partisan swipe at a common-sense spending issue, the New Jersey Republican Party was compelled to file it and isn’t dissuaded by the result. It was expected. Instead, it motivates us, as it should every New Jersey Republican, to get to work digging out Democrats who supported this $10 billion borrowing boondoggle.”

Four of the high court’s seven justices were appointed by Republican Gov. Chris Christie.

Former Assemblyman Jack Ciattarelli, a Republican gubernatorial candidate who backed his party’s suit as a friend of the court, saw the decision in the same light that Steinhardt did.

“Today’s decision is another slap in the face to New Jersey taxpayers who have for too long been victimized by irresponsible Trenton politicians,” he said. “Politicians who, along with Trenton special interests, have disadvantaged working men and women, seniors on fixed incomes and businesses large and small for two-plus decades.”

State Sen. Michael Testa (R-Vineland), who argued the case for GOP State Committee, suggested the court’s ruling prefaced future legal fights over the borrowing proposal.

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