Senator Steven Oroho (R-24) urged the Governor to stop exaggerating the current financial crisis because doing so only damages his credibility when asking for more federal assistance. While the Governor continues to claim that the State has lost $10 billion of budget revenue through June 30, 2021, his Treasurer has made public statements indicating that figure to be exaggerated.
Sen. Steven Oroho urged the Governor to stop exaggerating the current financial crisis because doing so only damages his credibility when asking for more federal assistance. (SenateNJ.com)
The Governor has warned publicly of an imminent cash crisis that would prevent the State from paying its bills for vital services, while his Treasurer has filed statements with the United States Securities and Exchange Commission saying New Jersey’s budget is balanced though September 30, 2020 with a $1 billion surplus.
“The financial crisis we are in is real, and I appreciate any efforts our congressional delegation makes to help our State to secure more assistance,” said Oroho, who serves as the Senate Republican Budget Officer. “The Governor is undermining those efforts when he so clearly overstates the problem and damages his credibility.”
Senator Oroho was referring to two particularly egregious examples of the Governor exaggerating the problem, as explained below.
1.) EXAGGERATIONS OF CASH FLOW EMERGENCY
Two weeks ago, in an effort to bully legislators into quickly approving legislation to borrow $10 billion, the Governor claimed the State is quickly running out of cash and that we would be unable to pay schools and continue funding for essential services if the Legislature did not act “within days.” On July 8, he said: “Now before I go on, I reiterate the need to secure the funding we will need to protect against an imminent fiscal meltdown by allowing us to go to the bond markets for an emergency infusion of cash to keep our state afloat. The Senate has had this bill for three months…. if there’s no action soon, and I mean in a matter of days, we will miss our opportunity. ” He has been using the same rhetoric when publicly calling on federal representatives to give the State more money, on top of the $9 billion already being provided by the CARES Act and other recent laws.
The Legislature acted a week ago on the bill, but to date, the Governor’s administration has not even initiated the first simple step of borrowing federal funds — the filing of a simple Notice of Intent with the Federal Reserve that we intend to apply for a loan.
See attached response from the New Jersey Department of Treasury that they have not filed the Notice of Intent.
The Governor’s own Treasurer, in a July 6 filing with the Securities and Exchange Commission, explained why exaggerations of “an imminent fiscal meltdown” and “need for an emergency infusion of cash” are untrue. The Treasurer’s statement assured investors the State’s budget was financially sound though the end of FY 2020 on September 30, with an approximately $1 billion surplus. It can be read here: https://emma.msrb.org/RE1363056-RE1059361-RE1468873.pdf
Additionally, the Administration has refused to publicly produce its cash flow projections. It’s obvious why. They won’t show the imminent meltdown claimed to exist.
See the attached denial for cash flow projections.
2.) EXAGGERATIONS OF A $10 BILLION REVENUE LOSS
The governor claims in public there is a $10 billion loss of revenue through June 30, 2021 due to COVID-19 impacts. He uses as the basis for this claim a May 22 revenue forecast produced by his Department of Treasury. But the State Treasurer admitted in the July 6 SEC filing (see the link above) she no longer stands behind that revenue forecast and believes it is overly pessimistic. The SEC filing updated the revenue forecast through FY 2020 and indicated it overstated revenue losses by $700 million for just that period. It did not yet update the overly pessimistic revenue forecast for 2021, though sales tax collections in the month of June (remitted to the State on July 20) were 10% off last year’s collections — not the 30% assumed in the May revenue forecast the Governor’s Treasurer is already abandoning.
The governor is citing revenue losses that his own Treasurer advises are clearly overly pessimistic.