Senator Sam Thompson (R-12) delivered the following remarks during the Senate Budget & Appropriations Committee today panning a $10 billion borrowing plan (S-2697/A-4175) proposed by Governor Phil Murphy and Democratic legislative leaders that could cost New Jersey taxpayers tens of billions in debt and interest payments over the next 35 years:
Sen. Sam Thompson’s remarks during the Senate Budget Committee’s consideration of a $10 billion borrowing scheme being advanced by Gov. Murphy and Democrat legislators. (Pixabay)
First off Mr. Chairman, I’d like to say I’m sorry this bill is being rushed. It is indeed unfortunate that this meeting, despite a bill not even being available to the public and not having been introduced yet, was scheduled Friday night with no meaningful notice. The pace at which this bill is moving is unnecessary.
The bill is simple. It’s giving authority to the Governor to issue $10 billion of debt to wash into the 2021 budget that starts October 1. It will be a one-shot revenue, leaving up to a $10 billion budget hole to be fixed in 2022 by either Governor or his successor. Worse than leaving today’s problem to be fixed in 2022, the borrowing will make the problem much worse by adding tens of billions of dollars of interest payments and hundreds of millions of dollars in financial fees and commissions.
The borrowing is incredibly irresponsible. It’s four times larger than the next biggest borrowing in the state’s history. It will throw a $10 billion anchor around the necks of people who are already struggling to make ends meet.
It’s being done to support a budget that hasn’t been proposed yet, but that we know will at least include school aid increases of up to 14% and public employee “step” salary increases of 4%. Those spending proposals have already become hard-wired. God knows what else this borrowing will support. I say “God knows what else” because even though this money will be used to prop up the 2021 budget, we don’t have a proposed 2021 budget. The Governor won’t propose one until August 25.
The Governor keeps saying this authorization is needed right away. He has been saying that since March when he tried to jam though a $9 billion borrowing bill. He tried to get it passed without committee consideration during a crisis when everyone was distracted. He continuously makes comments about how we are running out of cash, but it isn’t even close to being true.
Most recently, last Wednesday, he claimed if this bill were not enacted this week, he would run out of cash for all sorts of inflammatory things. I don’t say this lightly, but the Governor is not telling the truth.
The ink is barely dry on the 2020 budget change enacted in late June which gets the State though September 30. After it was signed by the Governor, the Treasurer filed a federally required statement with the financial marketplace. It disclosed that the changes will result in the State’s current budget being balanced and ending with an almost $1 billion surplus as of September 30.
So, the truth is we aren’t running out of cash. Not even close. In fact, we are headed through at least September 30 with a $1 billion surplus.
The real reason this bill is being rushed is because the Governor is failing to take even modest actions to prepare for our fiscal challenge and he doesn’t want to.
He failed to furlough nonessential public employees for three months when they could not work anyway and would have had benefits paid for by the federal government at levels equal to their salaries.
He failed to secure a true pay freeze from public employees and settled for a deferral of a 2% COLA on their salaries till a later date which saves nothing. In fact, like this bill, it just kicks cost increases down the road when double COLAs come due.
He continues to say he will do nothing to address the situation whereby people who work from home in NJ for NY corporate employers are being forced by NY to pay higher income taxes to them… when those income taxes should be assessed at NJ’ lower rates and kept right here at home. That’s something my colleague Senator Oroho has been sounding the alarm about for a long time. It’s increasing as a problem as all sorts of NJ residents are no longer commuting to NY and, instead, they are working from home. This is worth, potentially, more than $1 billion if we get aggressive on this issue and it actually could be a decrease for the folks working from home as the income taxes they pay would be on NJ’ lower rates.
The Governor has beat has been claiming he cut the budget with $1.2 billion of deappropriations. A closer look shows that more than half of those deappropriations were more than restored with supplemental spending in the budget changes enacted on June 30. $300 million of the deappropriations were enabled because federal money stepped in to cover costs of Medicaid. Much of those cuts amounted to spare change left over in various accounts that met their purpose.
Thus far, the only real cuts have been to property tax relief programs for seniors and disabled people with low incomes. Meanwhile, consider some of the following things the Governor hasn’t done that would make far more sense.
I have long been a champion of increasing school aid. Though disappointing to me, I appreciate that during a crisis, it is not possible. The money simply doesn’t exist for that. Yet the Governor certified to more than 115 school districts that they will get 5% or greater increases in aid next year. Atlantic City – a place where there are notorious excesses – will get a 14% increase.
And the Governor has been running around telling interest groups he will get them more money if this borrowing bill make it to his desk. We won’t know until August 25 which groups will be getting a payoff with this borrowed money. And that is exactly why he wants the authority now… so he can hide what this money will really pay for. It doesn’t have a thing to do with the “sky is falling” cry that next week we run out of cash.
I’m disappointed to see borrowing advance today. I know there is a commission of four people who will have to sign off on this debt when it is issued. Time will tell whether the commission curbs potential abuses, or whether it rubber stamps what the Governor wants. It’s possible, the commission could simply add more costs to what the Governor wants to spend, by withholding approval until he agrees to pork. Of course, our senators on the committee would hopefully never do such a thing… but the Assembly members? That’s a crowd that tried to jam though a $14 billion borrowing bill. Their lust for the public’s money knows no bounds.
I know my colleagues on the other side of the aisle have been under incredible pressure from the Governor to give him the authority to borrow approximately $10 billion for a couple of months now.
Many of you resisted and held out. The arguments you made were right. They were important. And they are right and important today.
For all those reasons, I will be voting no.