ESSEX COUNTY, NJ — On June 30, Gov. Phil Murphy signed the Fiscal Year 2020 Appropriations Act into law. The budget lacked the governor’s long-supported millionaire’s tax, which had been vehemently opposed by N.J. Senate President Stephen Sweeney.
While Murphy seemingly lost the fight for a millionaire’s tax, he hit back with Executive Order No. 73, which froze approximately $235 million in discretionary spending. The Murphy administration has listed 64 institutions that have temporarily lost their funding, so that the money can be placed into reserve for the Rainy Day Fund.
Under this executive order, among the institutions affected, Belleville Township Recreation will not receive the listed $125,000; Irvington’s Camp Irvington repair and redevelopment will not receive the listed $3 million; Turtle Back Zoo in West Orange will not receive the listed $4 million; the Essex County Recidivism Pilot Program will not receive the listed $6 million; The Essex County Jail substance use disorder programs will not receive the listed $20 million; Essex Crime Prevention will not receive the listed $3 million; Montclair State University will not receive the listed $7.5 million for its general operations; and the listed $1 million will not be given to restore East Orange’s train stations.
When asked for comment, Essex County Executive Joseph N. DiVincenzo Jr. declined to comment at this time.
“As directed by the governor, we have compiled a list of appropriation items that have been placed in reserve until further notice,” David Ridolfino, acting director of Treasury’s Office of Management and Budget, said in a July 3 release. “As noted in the executive order, the items placed in reserve will help the state maintain the surplus goals outlined by the governor. Our review, pursuant to Executive Order 73, is ongoing and will continue as new or additional information regarding individual items of appropriation is available.”
In determining which funding to place in reserve, the executive order laid out the following aspects for Treasury to consider: the amount of the item of appropriation; the likely statewide or localized impact of the item; the history of state support for the item; the timing during the fiscal year of any payments in support of the item; and the ability to delay payment until later in the fiscal year while monitoring overall budget performance.
“The budget enacted today is a victory for working families in New Jersey in many different ways — it supports middle-class priorities, invests in education, makes a record investment in NJ Transit, provides property tax relief and so much more,” Murphy said in a June 30 statement. “However, we must be honest about its shortfalls: This is a budget that does not include tax fairness, does not ask opioid manufacturers to help fund addiction services, and does not raise gun fees that have been untouched since 1966. These commonsense revenues would have allowed us to save for a rainy day and sustainably fund necessary investments for New Jersey’s 9 million residents. Make no mistake, I will continue fighting for tax fairness and fiscal responsibility well beyond today’s budget actions.”
According to the Murphy administration, the $235 million will be monitored by the Treasury Department and released if, during the course of the fiscal year, sufficient revenues and assumed savings materialize.
According to the administration, “the executive order was deemed necessary since the budget passed by the Legislature did not include much-needed reliable and recurring revenue sources — such as the millionaire’s tax — and instead included additional spending, while relying heavily upon questionable revenue and savings projections.”
But Sweeney is hitting back, calling this move from the Murphy administration an “abuse of gubernatorial power.”
“The governor’s action putting a so-called freeze on items cherry picked from the budget is a shameless act of political retribution that is both petty and vindictive — it’s Bridgegate on steroids that punishes those who disagree,” Sweeney said in a July 3 statement. “The governor has the authority to put a hold on state spending but he also has the responsibility to act in the best interests of the state. He is not living up to that responsibility.
“We sent the governor a fiscally responsible budget with a surplus of more than $1.3 billion. He signed it into law and officially certified the revenues,” Sweeney continued. “We are confident that our revenue estimates are as accurate now as they were last year when we were proven to be correct. We should be moving forward with a budget that strives to address the real-life needs of New Jersey’s 9 million residents who live outside Trenton politics.”
But according to the language of the executive order, the state’s finances are simply not strong enough should an emergency occur. The executive order cites a report released by Moody’s Investors Service on May 20, which “noted that 48 states are either ‘strongly’ or ‘moderately’ prepared for a recession because of their healthy reserve levels and fiscal flexibility; unfortunately, New Jersey was one of only two states that Moody’s identified as having ‘weak’ recession preparedness due to its large future obligations, such as pensions and health benefits, inadequate recurring revenues, and insufficient surplus.”
“As governor, I have a responsibility to protect New Jersey from economic downturn,” Murphy said. “With this budget, I am protecting our fiscal house and making the first deposit into the Rainy Day Fund in over a decade. We cannot and will not continue to spend without ensuring we have the necessary funds to do so.”