NJ Supreme Court to hear GOP suit against Murphy $9.9B borrowing - NJBIZ

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The New Jersey Supreme Court will hear oral arguments Aug. 5 and decide on a Republican-led suit challenging whether the Murphy administration can go forward with plans to borrow $9.9 billion to make up for cratering tax revenue amid the COVID-19 pandemic.

Gov. Phil Murphy signed the bill hours after the state Legislature sent it to his desk on July 16, after which the state’s Republican party followed through on widely publicized plans to challenge the proposal in court, arguing that it is unconstitutional.

Republicans, represented by GOP Sen. Michael Testa, R-1st District, have until July 24 to file their brief with the Supreme Court, and the Murphy administration has until July 31.  The hearing will commence 10 a.m. on Aug. 5

Gov. Phil Murphy holds his daily COVID-19 press briefing in Trenton on June 11, 2020. – RICH HUNDLEY, THE TRENTONIAN

Under the “COVID-19 Emergency Bond Act,” the state would borrow up to $9.9 billion through June 30, 2021. The law calls upon wartime powers granted to the governor by the state constitution so that Murphy could sidestep the legally-required voter approval.

A committee of four lawmakers would have to approve any spending, and by extension any borrowing, the Murphy administration wants to pursue.

Murphy said the money being borrowed is vital as state tax revenue craters because of the global COVID-19 pandemic, which has shuttered the nationwide economy and evaporated at least $10 billion in state tax revenue

It is not clear how much the administration plans to borrow, or how state officials would move forward if the court strikes down their plan.

Preparations for borrowing could last the entire summer and well into September. The three-month extension of the current budget runs until Sept. 30, and the next day is the start of the state’s fiscal year 2021 budget, where New Jersey faces a $7.2 billion shortfall.

A Thursday report by the Wall Street rating agency S&P indicated the state could take the route of much shorter-term borrowing if the Supreme Court sides with the Republican plaintiffs.

Murphy, when asked on July 17, did not comment, saying he would not comment on pending litigation.

But the governor and his fellow Democrats in the state Legislature argued that without the ability to borrow money, the state would be forced to make steep cuts in essential public services, such as teachers, housing, police and firefighters, medical workers and health care services.

“Absent this step I have yet to hear one idea from … opponents as to how to move forward,” the governor implored on Friday.

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NJ Supreme Court to hear GOP suit against Murphy $9.9B borrowing - NJBIZ
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