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Gov. Phil Murphy. (Photo: Kevin Sanders for the New Jersey Globe)

Murphy: New Jersey weeks away from fiscal disaster

Governor warns of ‘large-scale’ layoffs in latest call for additional federal aid

By Nikita Biryukov, May 04 2020 2:32 pm

New Jersey is weeks away from tumbling off a fiscal cliff that could lead to widespread layoffs in state, local and county governments, Gov. Phil Murphy said Monday.

On Monday, the governor rescinded an executive order enacted last year that called on Treasurer Liz Muoio to amass a $1.3 billion surplus by the end of the year.

“Absent significant outside assistance, this surplus is no longer feasible,” the governor said.

While the extent of havoc COVID-19 has wrought on the state budget remains unclear, officials are scaling up warnings about the increasingly-dire state of New Jersey’s finances.

The warnings the governor issued Monday are the starkest yet, and while the governor declined to speak specifically about what layoffs the state could expect to see in the coming weeks and months, he made clear they would be widespread.

“I can’t give you anymore color on eliminations, cutbacks, layoffs, but they will be large-scale,” Murphy said. “I’m not saying that with any joy. We’ll have no choice.”

In part, Murphy is banking on federal funds to help New Jersey stay afloat amid a near-total shutdown of the state’s businesses.

The administration expects federal authorities to issue new guidance related to funds made available under the Coronavirus Aid, Relief and Economic Security Act early this week, perhaps later Monday.

Current guidance explicitly bars states from suing CARES Act funds to plug budget holes created by the pandemic, meaning the roughly $1.8 billion New Jersey received from the bailout bill can only be used for new virus-related expenses.

The administration is also hoping for movement on the next wave of federal aid, which could appropriate hundreds of billions of dollars to direct relief for governments sent into a fiscal tumble by the virus.

“A fiscal disaster is not months away. These decisions will be on our doorstep in just a few weeks. Congress needs to act, and act now,” Murphy said. “I’ll continue to work as I have – with anyone, from either side of the aisle and at every level — to get this done for the people of New Jersey.

Murphy said that short-term borrowing could help the state with its immediate crisis, though even that won’t save some state programs.

The governor on Monday vetoed eight bills related to the pandemic over concerns that the state could not afford to pass them.

Each of those bills, among which were measures appropriating millions fund increased sanitation at healthcare facilities and food banks, would have cost the state money that Murphy says it no longer has.

“I don’t want to veto them, but given our current fiscal situation, I have no other choice,” he said.

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