New Jersey Supreme Court Clears Gov. Murphy's $10 Billion Borrowing Plan
By Joseph De Avila
The New Jersey Supreme Court upheld a law giving the state the
authority to borrow $9.9 billion to cover a budget shortfall
stemming from the coronavirus shutdown.
The state's Republican Party and other GOP lawmakers challenged
the new measure on constitutional grounds and argued that a
previous state Supreme Court ruling forbids counting borrowed money
as revenue to balance the budget.
In a unanimous decision written by Chief Justice Stuart Rabner,
the state's top court determined that the new measure was
constitutional because it met an exemption for an emergency caused
by a disaster. But the court said it wasn't judging whether the law
was wise public policy.
"Like so much else brought on by Covid-19, the legal issue
before the court is unprecedented," Chief Justice Rabner wrote.
"Laypeople, scientists and legal scholars alike would agree that
Covid-19 is a true disaster with widespread consequences. The
pandemic has caused a health emergency, a broad-based economic one
that has devastated many individuals and families and a fiscal
crisis for the state."
Doug Steinhardt, chairman of the New Jersey Republican Party,
said the GOP was compelled to challenge the new law because it was
"This decision confirms that all three branches of the New
Jersey state government are firmly in the grasp of the Democrat
Party," Mr. Steinhardt said. "The only way to put an end to out of
control spending is to send more Republicans to Trenton."
Democratic Gov. Phil Murphy signed the law last month and it was
passed by the state Legislature, also controlled by Democrats,
along partisan lines.
The state Department of the Treasury has estimated that tax
revenue will come up short by $9.2 billion through June 2021.
Supporters of the law said the state will be forced to make steep
budget cuts if they can't borrow money to fill a yawning budget
Mr. Murphy said he welcomed the state's Supreme Court's
"The alternative would've been something that no one up here or
anywhere would have wanted to experience," Mr. Murphy said at an
unrelated news conference Wednesday. "Our schools can be funded,
our residents and communities can be protected and our state can
Peter Verniero, a former justice of the New Jersey Supreme Court
and former state attorney general, said, "The COVID-19 pandemic was
central to the court's historic decision" and paved the way for the
state to borrow funds without voter approval.
The court's ruling set caps on how much New Jersey can borrow,
limiting the amount to no more than the state's projected shortfall
as caused by the pandemic. Those revenue figures must be certified
by the state, under the ruling from the court.
The court "recognized constitutional guardrails to caution
against future borrowing that might be unrelated to a genuine
emergency," Mr. Verniero said.
Write to Joseph De Avila at firstname.lastname@example.org
(END) Dow Jones Newswires
August 12, 2020 16:36 ET (20:36 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.