On Thursday, Governor Murphy announced that the state could borrow as much as $9 billion from the U.S. Federal Reserve to fill budget holes brought on by COVID-19. In response to this announcement, New Jersey Policy Perspective (NJPP) releases the following statement.
Brandon McKoy, President, NJPP:
“The ongoing health and economic emergency New Jersey faces from the COVID-19 pandemic justifies, if not demands, the borrowing proposed by Governor Murphy.
“New Jersey faces unprecedented challenges that endanger the economic security of families and small businesses, and stretch thin the financial resources our state relies on to help those in need. Without significantly more aid from the federal government, we are forced to choose between devastating cuts to public services that families need and borrowing billions of dollars to enable state government to meet its growing responsibilities to its residents.
“Borrowing, especially at the levels that would be required in this crisis, should always be viewed with skepticism, especially because New Jersey in the past has too often justified massive borrowing to support tax cuts that reduced the state’s ability to invest in the building blocks of economic growth. This situation is different. Borrowing now will speed our recovery out of this recession. This will require a disciplined approach that includes reforming the state tax code to make it fairer by calling upon the wealthiest to pay their fair share toward repaying, on schedule, what the state borrows.
“Policy decisions made in the next few weeks will set the path for New Jersey’s recovery. The worst thing the state could do when it’s in a hole like this is to keep digging. As we learned after the Great Recession, a response centered on cutting services and reducing investments in public needs will only slow New Jersey’s economic recovery, prolong the suffering of those harmed most by the pandemic, and worsen existing racial and economic inequality. Borrowing funds to plug budget holes, while far from ideal, is the best way for lawmakers to avoid harmful cuts in the short-term and maintain a strong social safety net for residents losing their jobs and businesses.”
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