(The Center Square) – Republicans and Democrats agree that New Jersey is facing some difficult financial decisions because of the novel coronavirus pandemic.
What they disagree on, however, is how to solve them.
The New Jersey Senate is expected to approve a plan that allows Gov. Phil Murphy to borrow up to $10 billion from the federal government to cover the state’s declining revenues. But Republicans say the state should first look at cuts or at least put the plan before the voters.
One Democrat is proposing another solution. Assemblyman John McKeon, D-Essex, is proposing a micro-cent tax on all stock trades. The idea was first proposed by another Democrat, the late David Applefield, who ran for New Jersey’s fourth district Congressional seat. Applefield died July 8, the day after the primary election. McKeon introduced the bill the next day.
The idea is not a new one, said Regina Egea, president of the Garden State Initiative, an independent research and educational organization.
“The 'micro cent' tax has been proposed several times in the past and there’s a very simple reason why it has never been adopted – technology,” Egea said. “Most stock trades are conducted online, instead of on a trading floor, and it would be very easy for companies to simply relocate their servers a few miles into New York or Pennsylvania, to avoid this tax.”
And the last thing New Jersey needs is to lose more jobs in the financial sector, according to Egea. The state led the nation in job losses from that sector from 2018-19, she said.
The circumstances warrant some short-term borrowing that includes revenue anticipation notes or lines or credit, Egea said. But she said Murphy’s plan is not the answer.
“While avoiding belt-tightening, the governor and legislative leaders are attempting to defer our commitments 35 years into the future, at great expense to taxpayers,” Egea said. “The state’s overall bonded and non-bonded debt currently stands well above $200 billion, roughly five times our annual budget. There needs to be a serious discussion, followed by a plan of action, on addressing the state’s mounting structural liabilities, primarily its indebtedness from public-pension and health-care obligations.”
If the Senate approves Murphy’s borrowing plan, the governor can borrow $2.7 billion in the extended fiscal year 2020, which ends in September, with the rest of the borrowing to come before the end of fiscal year 2021 next June. A four-member oversight board will have to say “yes” to the governor’s request.
Murphy said “you can assume that we will be putting money into the priorities and obligations that we speak about all the time.”
“Being there for education, health care, keeping our front-line workforce employed, meet our obligations on pension and other fronts but for the details, bear with us on that,” Murphy said at his Wednesday news conference.
Republicans call the borrowing plan unconstitutional and are expected to file a legal challenge once it is signed by Murphy.