Home Atl Hub Atl Hub News New Jersey Supreme Court justices allow $10B borrowing plan to stand

New Jersey Supreme Court justices allow $10B borrowing plan to stand

The justices who sit on the New Jersey Supreme Court have ruled that New Jersey’s elected representatives may borrow up to $9.9 billion to address the fiscal crisis that has arisen as a consequence of the 2020 COVID-19 pandemic.

The court issued its ruling on Aug. 12 in the case of the New Jersey Republican State Committee vs. Gov. Phil Murphy. The ruling came one week after oral arguments were heard by the justices of the state’s highest court.

The legal case arose from legislation Murphy signed into law on July 16. Murphy, a Democrat, signed the New Jersey COVID-19 Emergency Bond Act which authorizes the state to borrow up to $9.9 billion to address the fiscal crisis brought on by the 2020 COVID-19 pandemic.

In its ruling the court said “the law represents a policy choice made by the legislative and executive branches to address the current crisis. It is not for the judiciary to assess the wisdom of that decision. The only question here is whether the borrowing scheme violates the state Constitution. … Subject to the limits imposed here by the court, the bond act does not violate the Constitution.”

The court set forth certain limits with which the Democratic-controlled Legislature will have to comply as it moves forward with the borrowing plan.

The plaintiffs in the litigation were the New Jersey Republican State Committee; state Sen. Declan O’Scanlon (R-Monmouth); state Assemblyman Hal Wirths (R-Morris, Sussex, Warren); and residents Lisa Natale-Contessa of Toms River and Ileana Schirmer of Hamilton Township.

The Republicans’ complaint asserted, among other claims, that enacting the New Jersey COVID-19 Emergency Bond Act would be a violation of the Debt Limitation Clause of the state Constitution.

According to a press release from the governor’s office, under the law, the state has the authority to issue bonds totaling $2.7 billion for the remainder of the extended Fiscal Year 2020, which runs through Sept. 30, and up to an additional $7.2 billion for the nine-month Fiscal Year 2021 that runs from Oct. 1, 2020 through June 30, 2021, for a combined amount of up to $9.9 billion to be issued over the two periods.

In a statement following the Supreme Court’s ruling, O’Scanlon said, “I feel strongly that the Supreme Court ruled the wrong way. … The mission of government – to be responsible, fair and live within its means – doesn’t go away in the face of adversity. On the contrary, that mission becomes even more critical during such times.

“Regardless of our dissatisfaction with this ruling, it is our job as sitting legislators to do our best working within the bounds of the decision and minimize the damage that unfettered borrowing would have on the fiscal future of our state, as well as the economic pain it would have on our children and grandchildren.

“Thankfully, the decision does insist on accurate, regular certifications of revenue and shortfalls, and limits what borrowed funds can be used for.

“We must use all power vested in our co-equal branch of government to deal head-on with the challenges placed before us. Our children and grandchildren cannot afford our dumping today’s challenges on them. They will have enough of their own,” O’Scanlon said.

The New Jersey Democratic State Committee took a different view of the ruling and said, “The Supreme Court unanimously affirmed the constitutionality of Gov. Murphy’s COVID-19 emergency borrowing plan … if the lawsuit had been successful, thousands of first responders, teachers, public health workers and other essential employees would have been fired in the middle of the pandemic.

“The court wholly rejected the Republicans’ arguments and accepted Gov. Murphy’s reasoning that the borrowing plan is necessary given the stark financial realities the state is facing due to COVID-19. … Gov. Murphy and legislative Democrats are making the hard choices needed for middle class families to weather this storm,” the New Jersey Democratic State Committee said.

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