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Fine Print: What to Watch for as NJ Lawmakers Examine Gov. Phil Murphy’s Emergency-Borrowing Proposal


The Murphy administration has adjusted budget plans to account for the pandemic’s impact on state revenues, but wants greatly expanded borrowing authority; will legislators agree?

This story was written and produced by NJ Spotlight. It is being republished under a special NJ News Commons content-sharing agreement related to COVID-19 coverage. To read more, visit njspotlight.com.

Full story link – HERE.

By John Reitmeyer

Emergency-borrowing legislation that Gov. Phil Murphy wants lawmakers to enact so the state can deal with revenue losses caused by the coronavirus pandemic is scheduled to get its first committee review in the Assembly on Monday.

The emergency-borrowing proposal is also expected to be a topic of debate as Treasurer Elizabeth Maher Muoio appears before the Senate Budget and Appropriations Committee to discuss her department’s recent moves to rebalance spending in the wake of the pandemic.

So far, the Murphy administration has been able to make cuts and other budget adjustments to keep spending balanced through the end of September without borrowing. But Treasury officials are predicting deep revenue losses will continue for months and into next year as the pandemic continues, and they want the power to issue debt to address future shortfalls.

Here are five key issues to keep an eye on as the borrowing legislation advances in the State House:

How much borrowing?

The legislation introduced in the Assembly last week allows for $5 billion in state bonds, which would make it one of the largest debt issues in New Jersey history. The bill would also allow the state to borrow from the federal government, including on behalf of local governments. And it permits short-term borrowing, but also allows refinancing that could ultimately push the debt and interest payments out as long as 35 years.

Is this constitutional?

Murphy’s administration has argued that language in the state Constitution allows for otherwise strict limits on spending and borrowing to be relaxed during times of war or natural disaster. Language in the bill also says the borrowing is needed to “maintain and preserve the fiscal integrity of the State and its local government units.” But some lawmakers have questioned the administration’s interpretation of the Constitution’s emergency-borrowing powers, arguing the Constitution does not allow for bond proceeds of any kind to be treated as “revenue” to plug future budget holes. A recent opinion from the legal counsel for the nonpartisan Office of Legislative Services also raised similar concerns. If the borrowing measure advances, it will likely end up in court as lawsuits have already been threatened.

What’s the cost for taxpayers?

It’s too soon to say for sure, but the borrowing legislation allows for the issuance of general-obligation bonds, which are backed by the “faith and credit” of the state instead of a specific revenue source or a payment promise from lawmakers. That means the state pledges to increase taxes like the sales tax and even local property taxes to ensure general-obligation bondholders are paid. But without knowing the exact amount that will be borrowed, and the expected interest costs, it’s too soon to say exactly how taxpayers will be impacted. New borrowing could also bring on another credit-rating downgrade, which would only add to the interest costs that would ultimately have to be covered by taxpayers.

How much is New Jersey already in debt?

The pace of new borrowing has slowed during Murphy’s tenure. But New Jersey has for years been ranked by many measures as one of the nation’s most indebted states, including debt per capita and debt as a share of gross-domestic product, (GDP). Treasury’s most recent official accounting of the total amount owed to bondholders was $44.4 billion, which is more than the state’s annual budget of just under $40 billion. Also on the state’s books is an unfunded public-worker pension liability that measures more than $100 billion by some estimates.

What happens next?

If the borrowing proposal clears the first legislative-committee hurdle on Monday, it could go before the full Assembly as early as Thursday. From there, its fate remains uncertain. While the measure has enjoyed strong backing from Assembly Speaker Craig Coughlin (D-Middlesex) and many liberal groups that make up the governor’s base, it has yet to win the backing of Senate President Steve Sweeney (D-Gloucester). And since spending has been rebalanced through the end of September without any revenue from borrowing, it may take until income and corporate-business tax payments are collected and tallied up in July for the Senate to make a final decision on whether new borrowing is needed. From there, the threat of litigation could keep the borrowing proposal sidelined even longer.

 

Header: Photo by Daniel Thiele on Unsplash

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No Immediate Cuts in State Aid to Schools in Murphy’s Revised 2020 Spending Plan


But increases to direct aid, as well as boosts to preschool and special education, end up on cutting-room floor

This story was written and produced by NJ Spotlight. It is being republished under a special NJ News Commons content-sharing agreement related to COVID-19 coverage. To read more, visit njspotlight.com.

Full story link – HERE.

By John Mooney

As he scrambles to close a multibillion-dollar budget hole, Gov. Phil Murphy will likely face little choice but to take a sizable sum out of New Jersey’s public schools, which represents the single largest slice of state spending.

But at least for now, schools have been left largely spared.

On Friday, the Murphy administration presented its revisions to the fiscal 2020 budget in the face of COVID-19, announcing more than $5 billion in overall cuts and deferrals across state government.

That included more than $330 million Murphy and state treasurer Elizabeth Maher Muoio pulled back in proposed increases in state school aid for the next academic year and all funding for preschool expansion and for extraordinary special-education costs.

But they did not call for a cut in existing direct aid and said districts would get the same overall amount they saw in 2019-2020.

Allotments to be announced

An administration official said precise allotments for each district would be announced soon, once the state’s school-funding formula was run with the same amounts used in fiscal 2020.

That likely means districts that stood to gain under the formula last year would do so again, and those already facing cuts would also would need to make them.

“The formula is being rerun,” the official said in a background briefing with reporters on Friday. “So the districts that are overfunded, the reductions are going to follow the statutory reductions, and those overfunded amounts will be reallocated to the districts who are underfunded. But no additional funding is being pumped into those underfunded districts.”

School leaders over the weekend were still waiting for details from the administration to judge how their districts would fare, but several were relieved that there weren’t any blanket cuts in the offing, at least not yet.

“Some expected the kind of 5% across-the-board cuts that we all experienced back in ‘09 and ‘10,” said Elisabeth Ginsburg, director of the Garden State Coalition of Schools, representing more than 100 mostly suburban districts. “Needless to say, those individuals are relieved.”

Others said they were also pleased that Murphy was at least following the formula under the state’s School Funding Reform Act, albeit at a lower level.

“It is encouraging to learn that the governor appears committed to school funding that remains aligned to SFRA, even if on a proportional basis,” said Mike LaSusa, superintendent of Chatham Schools. “When Gov. Christie slashed funding a decade ago, he did so with zero relationship to the formula and that led to a decade of haphazard funding.”

What will September bring?

Nonetheless, he and others said big questions remain going forward, including what the precise figures will be and, of course, what schools will look like come September.

“If, for example, we learn by the end of June what we can expect in terms of funding, and we also learn that it will not be possible to run athletics in the fall, that would help us make sound decisions now,” LaSusa said.

“We all understand there is pain ahead; the sooner the governor can inform us of the particulars of the pain, the better we can manage it,” he added.

A big question also surrounds what happens after this extended fiscal year ends and the next begins.

Murphy is slated to announce a new state budget for fiscal 2021 in late August. In an appearance on CNN’s “State of the Union” this weekend, he said schools would surely be among those facing cuts and possible layoffs if the state does not see significant relief from the federal government.

“This includes potentially laying off educators, firefighters, police, EMS, health care workers,” Murphy said. “This is not abstract. This is real.”

David Sciarra, executive director of the Education Law Center, said the federal government — even beyond this year — will need to step up to avert a further crisis in the schools.

“Flat state funding will get us through the next few months, coupled with $400 million in federal emergency funds to help reopen schools safe and ready for students,” he said in an email yesterday.

“But the forecast of big cuts in state school aid to be backfilled with new rounds of federal crisis funds is not a viable long-term strategy,” he wrote. “The only solution is a major, recurring infusion of federal funds over the next three to five years, to be reduced only when the state revenue sufficiently recovers to make up the shortfall.”

 

Header: Photo by Element5 Digital on Unsplash

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Governor Phil Murphy

Plan to Partially Furlough Public Employees Awaits Governor’s Signature


Proposal easily clears Legislature, but Murphy has been hard to read on plan that taps new federal benefits allowing furloughed workers to offset lost wages with unemployment claims

This story was written and produced by NJ Spotlight. It is being republished under a special NJ News Commons content-sharing agreement related to COVID-19 coverage. To read more, visit njspotlight.com.

Full story link – HERE.

By John Reitmeyer

A plan that would pave the way for state and local governments in New Jersey to cut costs by partially furloughing public employees — without hitting the workers in their wallets — is now on the governor’s desk awaiting final action.

The bipartisan proposal, which builds on prior state law and also seeks to take advantage of enhanced unemployment benefits available during the COVID-19 pandemic, won overwhelming support in both houses of the Legislature on Thursday.

However, the fate of the bill remains uncertain as Murphy, a first-term Democrat, has not taken a firm position for or against the proposal since it was first introduced earlier this month.

Some lawmakers have raised concerns that the measure could end up sending even more workers into a state unemployment system that has been overwhelmed in recent weeks under a crush of new benefit claims.

But the pressure to enact the legislation may also have increased as revenue losses continue to pile up in municipalities, counties, school districts and the state itself during a pandemic that has raged for two months in New Jersey.

“We have to do everything we can to save tax dollars now to avoid a bigger budget crisis later, and this program will save hundreds of millions of dollars,” said Sen. Steve Oroho (R-Sussex), a primary sponsor of the bill.

Furloughs, not firings

New Jersey already has a “job-sharing” law designed to reduce the need for mass layoffs during times of economic downturn by offering employers — both public and private — with incentives to only reduce employee hours, including via partial furloughs.

The legislation that’s now on Murphy’s desk would enact a number of policy changes to tailor existing law to take full advantage of enhanced federal unemployment benefits that are being provided through the end of July. Those benefits, funded by the $2 trillion federal CARES Act, are providing unemployed workers with an additional $600 a week until the July deadline.

The proposed policy changes include language that would protect seniority rights and pensions for workers whose employers choose to implement a job-sharing program. The measure would also increase, from 20% to 40%, the amount of income that can be earned by workers without crimping their unemployment benefits. It also allows for precertification of unemployment benefits for workers who are scheduled to be furloughed.

For many workers, the supersized federal benefits would allow them to collect the same or better pay even as they miss time at work — with the federal government picking up a large share of the tab. In fact, the bill’s bipartisan sponsors estimate that any worker making $89,000 or less in annual salary would be kept whole or even make out better, even as they miss up to three days of work a week.

Significant savings statewide

Meanwhile, the sponsors also estimate their proposal could ultimately save as much as $750 million spread across state, local and county governments, including school districts. That’s based on an assumption that 100,000 out of a total of 400,000 public workers in New Jersey would end up being furloughed for three days each week over a three-month period. But the bill wouldn’t force any employers to furlough workers, including the state, if they choose not to.

In addition to passing unopposed in the Legislature — the margins were 80-0 in the Assembly and 36-1 in the Senate, with no abstentions — the bill has also picked up support from both business-lobbying groups and labor in recent weeks.

“Launching a statewide job-sharing furlough program is the ultimate win-win for public and private employers whose revenues have been plunging because of the coronavirus recession, and for furloughed employees who would get more money in their pockets without any loss of health or pension benefits,” said Senate President Sweeney (D-Gloucester), another primary sponsor of the bill.

The bill’s adoption on Thursday coincided with the release of the latest unemployment data by the state Department of Labor and Workforce Development that indicated 70,000 new claims for jobless benefits were filed in New Jersey last week. That helped push the total number of new claims filed since mid-March above 1 million.

While a total of $2.7 billion in unemployment payments have gone out over the past nearly two months, the Murphy administration has continued to be barraged by complaints about backlogs and other problems that New Jersey residents have faced while trying to obtain jobless benefits.

Adding claims to overworked unemployment system

Assemblywoman Holly Schepisi (R-Bergen) was among the lawmakers who raised concerns on Thursday about the potential for sending more workers into the unemployment system even as it continues to be strained by the pandemic. Schepisi said her own legislative staffers have been “essentially working as caseworkers for the Department of Labor” over the past few weeks.

Asked about the partial-furlough bill during a media briefing in Trenton last week, Murphy didn’t directly shoot down the idea, but he also didn’t offer any kind of endorsement. He said the pandemic has only heightened the importance of the services that many public workers provide in New Jersey.

“On furloughing, I would just say this: As a conceptual matter, it’s something that we’re open to,” Murphy said.

During a briefing on Thursday, Murphy also addressed his administration’s latest revised revenue forecasts, which were released late in the day on Wednesday. They include a projected budget shortfall for the remaining months of fiscal year 2020 that totals $2.75 billion, or roughly 7% of the original spending plan. For fiscal year 2021, the Murphy administration is lopping another nearly $3 billion in revenue from the revised estimate for fiscal 2020.

“Could the budget shortfall get worse? Yes,” Murphy said in response to a reporter’s question. “It could, in particular, if we stop complying (with social-distancing measures).”

A statement issued by Oroho and several other Republican senators later in the day urged Murphy — who has been seeking approval of emergency borrowing legislation — to consider enacting “reasonable spending restraints and creative nontax solutions first, as part of a more common-sense and pragmatic approach.”

“We fear the Governor is on a path of simply repeating his past irresponsible demands,” the statement said. “If he does, we will work with Senate Democrats to advance a different approach to solving the budget challenge.”

 

Header: Courtesy Governor Phil Murphy’s Facebook page

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Murphy Gives Local Officials Option to Push Back Property-Tax Deadline


Governor gives cities, towns ability to lengthen grace period by a month to June 1, but concerns already being raised about next payment deadline on August 1

This story was written and produced by NJ Spotlight. It is being republished under a special NJ News Commons content-sharing agreement related to COVID-19 coverage. To read more, visit njspotlight.com.

Full story link – HERE.

By John Reitmeyer

An executive order issued by Gov. Phil Murphy just days before May 1 property-tax payments are due is enabling local officials to push back the payment deadline by a full month.

Murphy’s 11th-hour executive order doesn’t automatically extend the May 1 payment deadline, but instead gives New Jersey’s municipalities the option of lengthening a statutory grace period to help taxpayers struggling with the coronavirus pandemic.

The executive order was announced during a media briefing on the pandemic held in Trenton on Tuesday. It drew immediate praise, including from officials who represent the state’s many cities and towns, some of which are facing their own financial hardships amid the still-unfolding pandemic.

State of grace for taxpayers

In communities that choose to take advantage of the executive order, taxpayers will be able to wait until June 1 to submit their May 1 payments, without facing the penalties and interest that local officials can charge after the grace period, which typically lasts 10 days.

“I think it was wise to make this permissive,” said Michael Cerra, the assistant executive director of the New Jersey State League of Municipalities. “It’s in the hands of local officials.”

New Jersey has been among the hardest-hit states as the pandemic has spread across the country in recent weeks, trailing only New York in reported COVID-19 infections and fatalities. In addition, strict social-distancing measures ordered by Murphy to prevent further spread of the disease have shut down many businesses that have been deemed “nonessential,” and unemployment claims have reached record highs in recent weeks.

In response to the economic hardships, Murphy, a first-term Democrat, had already taken action to delay the state’s April 15 income-tax deadline. Other newly enacted measures have also assisted homeowners struggling to pay mortgages and tenants in danger of falling behind on their rent.

Murphy’s ‘additional measure of relief’

Murphy described his latest executive order as “an additional measure of relief” as he discussed it during Tuesday’s briefing.

Under a quarterly-payment schedule established in state law, property taxes are due on the first day of February, May, August and November. They can be paid directly to a municipality or through a mortgage company, which is something many homeowners do as they pay down home loans over the long term.

State law allows for the 10-day grace period for property owners to make their payments without facing penalties or being charged interest.

Lt. Gov. Sheila Oliver, who leads the state Department of Community Affairs, said the payment delay for taxpayers that will be allowed under Murphy’s executive order will help property owners who “need extra time to get their finances in order.”

“We understand that many property owners are coping with financial challenges they’ve never had to face before because of this pandemic,” she said during the briefing.

Stephanie Hunsinger, New Jersey state director for AARP, said she hopes “all New Jersey municipalities act immediately to provide relief to their residents.”

“On behalf of AARP New Jersey’s nearly 1.3 million members, we applaud Gov. Murphy and his administration for issuing today’s executive order,” Hunsinger said.

But many communities are also getting hammered themselves by the pandemic as social-distancing regulation have restricted many activities that generate significant revenue. And while New Jersey is notorious for having some of the nation’s highest property taxes, those bills fund much of the frontline services that are being leaned on heavily during the pandemic, including police and other first responders, as well as municipal health officials and sanitation workers.

In addition, while municipalities collect property taxes, they must turn over a large portion of the revenue to local schools and county governments in transfers that are due by the 15th of every month.

Can local officials afford the extension?

Making it an option for a town to extend the 10-day grace period allows local officials to work with their professionals to assess whether they can afford to offer the extension, especially since the deadline for turning over tax collections to school districts and counties still remains in effect, Cerra said.

With the intervention coming from Murphy so close to the May 1 deadline, many local officials had already begun to take action on their own to give their residents a break. In some cases, officials passed local resolutions that lowered the interest rates that can be charged for late payments to the lowest amount allowed under state law, which is less than 1%.

The executive order creates a uniform way for municipal officials to provide taxpayers with a break during the pandemic, just as Murphy has by doing things like delaying the April 15 income-tax deadline, said Cerra, whose organization will likely be drafting a model resolution to distribute to local officials.

“I think local officials were looking to do same,” Cerra said.

Legislation had been proposed in recent weeks in the state Assembly to push back the May 1 deadline for many homeowners to July 15, which would have matched the state’s new deadline for filing income taxes. But that bill has stalled since its introduction.

Despite Tuesday’s action from the governor, Cerra said the next quarterly payments, which will be due on August 1, have already been flagged as a looming concern. Many homeowners may have had enough in escrow accounts to cover their May 1 property-tax payments, but they may still be facing economic hardships several months from now.

“We’re a little bit concerned about August 1,” he said.

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Courtesy Jersey City Arts Council

Mayor Fulop’s Bid to Pull Arts Referendum Gets Mixed Reviews


Mayor Steven Fulop is seeking withdrawal of a planned November referendum to create an “Arts and Culture Trust Fund” for Jersey City arts organizations and educators, according to a press release issued by his office yesterday.  The announcement was met with immediate pushback from arts organizations and some members of the municipal council.

If on the ballot and approved, the referendum would raise approximately $800,000 for the fund through a special levy.  But the mayor now says the coronavirus pandemic is making such a new tax too burdensome.

“We were the first to put out an actionable plan supporting sustainable funding to benefit our burgeoning arts industry and our residents, but the world is changed today, and we want to minimize the impact on our taxpayers as much as possible,” the mayor explained in announcing his request.

Art House Productions, a leader in Jersey City’s arts community, strongly disagrees.  Speaking on its behalf, executive director Meredith Burns, said:

“As a homeowner here, I understand the burden of taxes, especially now, however I know the entire city will receive so much in return with a designated arts fund. I think there are options to explore before we cancel an important piece of legislation that the mayor’s office, cultural affairs and the arts community has worked so hard for.”

Samuel Pott, artistic director of Nimbus Dance Works, noted that many arts groups are on thin financial ice due to the Covid-19 crisis.  “Many groups will not survive without intervention. If the arts referendum is pulled, what is the city doing to ensure the survival of the nonprofit arts sector?”

Heather Warfel Sandler, chair of the Jersey City Arts Council, added, “The JCAC fully intends to see this Arts Trust effort through.” That said, she did note, “We have one chance to ask the voters, so carefully weighing the best time to generate support for this is crucial.”

Councilman Rolando Lavarro said he understands the mayor’s motivation.  “Still, it should be noted that the decision to pull the referendum doesn’t have to happen today or in May.  Legally, it could be made as late as mid-August. Between now and August, I think the City should work with artists, social service providers, economic experts and other stakeholders to better understand the needs, hardship and loss that is out there.”  Councilman James Solomon echoed the sentiment.   “The conversation is premature. The Council has until August to determine if the referendum should move forward. We must carefully weigh the economic pain of taxpayers with the financial struggles of artists and arts organizations, who may need emergency funding to remain in existence.”

The mayor’s decision does have supporters. Councilwoman Mira Prinz-Arey joined in the mayor’s request, but promised to “continue to fight for them and support” the arts organizations.  To other supporters, such as councilwoman Denise Ridley, the issue is simply one of timing.

“I believe the best way to prepare as a municipal government is to find ways to cut back on spending, give residents breaks where we can and do our part to support residents’ needs. Art is an important part of Jersey City culture and definitely something that should be revisited once we are on more stable ground,” she said.

 

Header: Courtesy Jersey City Arts Council

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Can State, Local Governments Save Hundreds of Millions by Furloughing Workers?


Proposed plan from two Senate Dems would save money by furloughing workers while ensuring they qualify for enhanced federal unemployment benefits

This story was written and produced by NJ Spotlight. It is being republished under a special NJ News Commons content-sharing agreement related to COVID-19 coverage. To read more, visit njspotlight.com.

Full story link – HERE.

By John Reitmeyer

Two New Jersey lawmakers are proposing a new way for state and local government to save millions of dollars by partially furloughing workers during the coronavirus pandemic.

At the same time, their plan seeks to ease the blow on those furloughed workers by ensuring they can qualify for enhanced federal unemployment benefits even as they miss time at work.

New Jersey appears to be the first state to consider this approach to COVID-19 furloughs.

The proposal detailed in draft legislation provided to NJ Spotlight on Monday is a twist on the state’s existing “job-sharing” law, which is designed to reduce the need for mass layoffs during times of economic downturn by providing employers with incentives to only reduce employee hours.

It also relies on beefed-up unemployment checks that are being funded by the federal government through the end of July under the $2 trillion stimulus bill that was enacted by the Congress late last month in response to the pandemic.

The projected savings

The legislation is sponsored by Sens. Steve Sweeney (D-Gloucester) and Nellie Pou (D-Passaic), and savings estimates range from $150 million for the state to potentially three times that amount combined for local governments, depending on how many would participate.

“The purpose of this bill is to facilitate the providing of the maximum possible benefits for employees and savings for employers in the State from the federal financing of unemployment benefits,” the draft legislation said.

The bill’s pending introduction comes as Gov. Phil Murphy has repeatedly warned that New Jersey’s revenue projections are taking a tumble as COVID-19 infections continue to increase, and as the state continues to adhere to strict social-distancing measures in an effort to prevent further spread of the virus. They include closing many businesses that have been deemed “nonessential” by the governor.

Murphy, a first-term Democrat, has in recent days called for direct financial aid from the federal government to offset projected revenue losses, and he has also submitted to legislative leaders draft legislation that calls for the state to attempt to use emergency bonding powers that are written into the state Constitution to help fortify coffers during times of war or natural disaster.

The Murphy administration has yet to publicly detail how much lost revenue it is expecting through the end of the current fiscal “year,” which has been extended on emergency basis by three months to the end of September.

COVID-19 losses, a moving target

In a recent bond disclosure, the administration said only that it would be “some time before the State is able to fully assess how the varying impacts of COVID-19 will impact its revenues and expenditures, both for this fiscal year and for future fiscal years.”

The Murphy administration indicated in the same bond disclosure that it has extended the term of a $1.5 billion short-term borrowing issue to the end of September. The disclosure also suggested the administration is seeking legislative approval for as much as $5 billion in an emergency bonding in response to the pandemic.

While Assembly Speaker Craig Coughlin (D-Middlesex) has indicated a willingness to work with the Murphy administration on its borrowing proposal, Sweeney has yet to go that far. Instead, he’s announced the formation of a new bipartisan working group to study the economic fallout from the coronavirus led by Sens. Paul Sarlo (D-Bergen) and Steve Oroho (R-Sussex).

Sweeney is also co-sponsoring the measure with Pou that would seek to generate as much as $750 million in savings for state, local and county governments in New Jersey by allowing for the temporary furloughing of some public-sector employees to occur through the end of July. The sponsors’ savings estimates are based on an assumption that one-quarter of the 400,000 workers who are employed by state, local and county governments in New Jersey at various pay grades will end up being furloughed for three days each week over a three-month period.

Thanks to the provisions of the state’s 2011 job-sharing law — which also applies to private-sector employers — temporarily furloughed employees can still qualify for unemployment benefits under plans approved by the state. Under the draft legislation, furloughed public employees would be able to get about the same, or in some cases, better pay even as they miss time at work during the pandemic, thanks to the federal stimulus bill, which is funding enhanced unemployment benefits worth an extra $600 a week for many workers through the end of July.

Furloughed workers would also still qualify for full benefits, and their employers may see a benefit in the form of lower unemployment taxes, under the state law. At the same time, the sponsors are proposing protections for workers to ensure all pension credits and seniority rights continue to accrue as they would under more normal circumstances, according to the draft legislation.

While most of the savings would accrue to local and county governments, the $150 million in estimated savings for the state is roughly equal to the amount of funding for Homestead property-tax relief benefits that were due to go out in May before being pulled back by the Murphy administration as part of a nearly $1 billion spending freeze announced late last month.

Asked for comment on the draft legislation on Monday, Murphy press secretary Alyana Alfaro Post said, “While the governor’s office does not comment on specific or pending legislation, Gov. Murphy remains committed to ensuring that as many New Jerseyans as possible remain gainfully employed as we combat the COVID-19 pandemic.”

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Mortgage Help During COVID-19 Crisis, But What About Property Taxes?


Without relief, property owners hit hard by illness or income loss will have to cover payments due May 1 or incur penalties

This story was written and produced by NJ Spotlight. It is being republished under a special NJ News Commons content-sharing agreement related to COVID-19 coverage. To read more, visit njspotlight.com.

Full story link – HERE.

By John Reitmeyer

To ease the economic pain of the coronavirus pandemic, New Jersey homeowners have been granted mortgage relief from banks and a reprieve from evictions. But no such help has been approved thus far from local property tax bills.

That means many homeowners who are dealing with economic hardships caused by severe illness, the loss of a job or a shuttered business are also being forced to cover quarterly property tax payments by a state-imposed May 1 deadline.

Potentially making matters worse for thousands of New Jersey homeowners is the state’s recent freezing of all funding for the next installment of Homestead property-tax relief benefits. They were supposed to be paid out by the state as direct credits to effectively reduce those May quarterly bills, but Trenton is facing its own economic shortfalls.

Even if they wanted to grant an extension of the property tax deadline, municipal officials say such relief will require executive action from the governor or new legislation since the quarterly payment schedule is set in state statute.

A bill to extend the May 1 deadline for many property owners this year has been drafted by Assemblyman Robert Karabinchak (D-Middlesex). It’s on schedule to be formally introduced in the lower house this week. But it remains to be seen whether it or other efforts can pick up sufficient support between now and the end of the month to help struggling homeowners.

High-tax state

New Jersey is notorious for having some of the nation’s highest property taxes, and the size of the average bill in the state increased by another nearly $200 last year to a record $8,953, according to the latest figures released by the state Department of Community Affairs.

Property tax payments are assessed and collected at the local level in New Jersey, with municipalities using a quarterly billing system set in state statute to raise the funds needed for their own government services, as well as for local schools and county government.

Of particular note during the COVID-19 emergency, local property taxes are paying for much of the frontline services that are being leaned on heavily right now in New Jersey, paying the salaries of police officers and other first responders, as well as municipal health department and sanitation workers.

Under the statewide schedule, property taxes are due on the first day of February, May, August and November. They can be paid directly to a municipality or through a mortgage company, which is something many homeowners do as they pay down home loans over the long term.

State law also allows for a 10-day grace period for property owners to make their payments without facing penalties. But it also requires municipalities to turn over all portions of tax payments that fund local schools and county governments by the middle of the month.

The New Jersey State League of Municipalities has suggested the best way to provide immediate tax relief to those who are struggling financially is to expand the typical 10-day grace period for the May 1 deadline by executive order or legislation.

“Our recommendation is to extend that grace period,” said Michael Cerra, who serves as the municipal-lobbying group’s assistant executive director.

At the same, Cerra’s group is also suggesting municipalities should also get a break on their requirement to turn over all funds to local schools and counties by May 15. Otherwise, municipalities could have to take on costly short-term borrowing to cover those bills, he said.

“You can’t have one without the other,” Cerra said.

Payment date of July 15 instead of May 1?

Karabinchak’s bill, according to a copy that was provided to NJ Spotlight, would extend the May 1 deadline for all residential and commercial property owners in New Jersey who don’t make property tax payments through an escrow account controlled by a bank or other financial institution. The funds for those payments have likely already been set aside.

“People should not have to choose between paying for groceries and medication or paying their property taxes because they have been ordered to stay at home and have consequently lost income,” Karabinchak said.

No penalties, fees or interest would be levied under the measure as long as May 1 property taxes are paid by July 15, which is the same deadline that the federal government is using this year for the filing of U.S. income tax returns. Murphy and lawmakers have also announced they want to use the same deadline for state returns this year, but an official extension has yet to be enacted.

Last month, Murphy announced that an agreement was reached with more than 40 different banks to provide homeowners who are struggling with economic hardships caused by the pandemic with a mortgage-payment forbearance lasting as long as 90 days. Financial institutions have also agreed to not report late mortgage payments during this period to major credit-reporting agencies that track individual credit histories.

In addition, last month Murphy signed a temporary ban on evictions for both homeowners facing foreclosure and tenants who have fallen behind on their rent payments. The measure was one of many included in an economic-relief package that state lawmakers rushed to the governor’s desk in response to the pandemic.

Lots of red ink

Those efforts and others come as thousands of New Jersey residents have lost their jobs amid strict social-distancing measures that Murphy ordered to help stop the spread of the disease. They include the closing of all businesses deemed as “nonessential” across the state.

A total of 44,416 New Jersey residents have tested positive for COVID-19 as of the latest official update from the Murphy administration. Another 1,232 residents have died.

Meanwhile, 206,253 new claims for unemployment benefits were reported in New Jersey last week, according to the latest state data, easily topping the record set just the week before.

Adding to the financial squeeze for many New Jersey residents will be the loss of next month’s Homestead property tax relief benefits due to a freeze on nearly $1 billion in state spending ordered by the Department of Treasury in response to the pandemic. That comes as the state has seen its own revenues plummet, in part due to the aggressive social-distancing measures.

More than 500,000 homeowners in New Jersey receive Homestead benefits, which are offered to seniors and the disabled who make up to $150,000 annually, and all other homeowners who make up to $75,000 annually.

For his part, Murphy hasn’t said much yet about the looming May 1 property tax deadline as he’s focused primarily on issues related to the health crisis itself. Asked by a reporter about the potential for an extension during a media briefing held earlier this week, Murphy responded by saying there was “nothing new to report.”

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Governor Phil Murphy

New Jersey Tax Filing Deadline is Extended from April 15th to July 15th


The state income tax filing deadline and the corporation business tax filing deadline will be extended from April 15 to July 15, as part of the State’s response to the ongoing COVID-19 pandemic. This is an automatic extension. There is no need to file for an extension.

Governor Phil Murphy, Senate President Steve Sweeney and Assembly Speaker Craig Coughlin issued the following joint statement yesterday on the tax filing deadline and the state budget timetable:

“The ongoing COVID-19 pandemic has caused hardships, financial strain, and disruptions for many New Jerseyans and New Jersey businesses. As part of our response, we have reached agreement that the state income tax filing deadline and the corporation business tax filing deadline will be extended from April 15th to July 15th.

“Additionally, as part of the whole-of-government effort that is going into fighting COVID-19, we have agreed that the state fiscal year should be extended to September 30th . This will allow the Administration and the Legislature to focus fully on leading New Jersey out of this crisis, and to allow for a robust, comprehensive, and well-informed budget process later in the year.

“We are committed to working together to enact the necessary legislation and supplemental appropriations to accomplish these goals.”

Previously, the U.S. Treasury Department and Internal Revenue Service announced that the federal income tax filing due date is also extended from April 15 to July 15. Taxpayers can also defer federal income payments due on April 15, 2020 to July 15, 2020, without penalties and interest, regardless of the amount owed. This deferment applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax. Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief.

 

Header:  Photo courtesy Governor Phil Murphy’s Facebook page

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Murphy Will ‘Almost Certainly’ Announce State Tax-Filing Extension But Won’t Say When


Governor says delay is due to ‘a number of moving parts,’ such as how state will pay its own bills, amount of federal support

This story was written and produced by NJ Spotlight. It is being republished under a special NJ News Commons content-sharing agreement related to COVID-19 coverage. To read more, visit njspotlight.com.

Full story link – HERE.

By John Reitmeyer

A final decision is still pending, but it sounds like Gov. Phil Murphy may soon be granting New Jersey taxpayers a temporary reprieve from next month’s fast-approaching deadline to file state income taxes.

Over a week ago, state lawmakers sent the governor bipartisan legislation that would put off the April 15 deadline for both filing state income taxes and making payments to settle any tax obligations they still owe, citing concerns about the ongoing novel coronavirus pandemic as a reason to provide more time this year.

That’s something President Donald Trump’s administration has already done at the federal level as many Americans have lost their jobs or have faced other hardships caused by the pandemic. The new deadline for filing federal income taxes and making payments is July 15.

But Murphy has yet to take similar action at the state level, sowing some confusion among taxpayers as the April 15 deadline — at least for state income taxes — draws nearer.

When a reporter asked Murphy about the issue on Thursday during the governor’s daily press briefing on the state’s ongoing response to the pandemic, Murphy said he will “almost certainly” be granting state taxpayers an extension. But he stopped short of saying how soon there will be an announcement, and exactly how long of a delay will be granted.

‘Trying to figure out where to land’

“We’re just trying to figure out where to land,” Murphy said. “There are a number of moving parts associated with it.”

One of the moving parts the governor was likely referring to was exactly how to delay the collection of state income-tax payments without making it impossible for state government to pay its own bills — especially since the income tax is the state budget’s largest single source of tax revenue. The fate and size of any federal support for the state budget that would come from a massive relief package moving through the U.S. Congress this week is also another important factor.

Among the economic-relief bills that state lawmakers rushed to Murphy’s desk last week was the measure calling for an extension of the state deadlines for filing both gross-income and corporate-business taxes. While the legislation was drafted prior to the federal government taking final action, it allowed for the state deadlines to be extended to June 30. That’s an important date for the state budget because it is the last day of New Jersey’s fiscal year, and the state constitution does not allow for a deficit to be carried forward.

A conditional veto

But in the wake of the Trump administration’s decision to move the federal deadline all the way back to July 15, most tax filers and accountants would probably like to see the governor issue a conditional veto or some other executive action to make the state’s deadline line up with the federal cutoff.

“Needless to say, it is a big concern for our members,” said Ralph Albert Thomas, the executive director and chief executive officer of the New Jersey Society of Certified Public Accountants, during an interview with NJ Spotlight.

In addition to simplifying the tax-filing process, many have also suggested a longer extension could help lessen the burden for those struggling with serious illness, a job loss, or some other difficult situation that has put a strain on their personal finances.

New Jersey has reported a total of 6,876 positive cases of COVID-19, as of Thursday’s press briefing, making the state one of the hardest hit so far. The state also processed a record-high 155,815 new claims for unemployment benefits last week, according to the state Department of Labor and Workforce Development. That surge in jobless claims comes as Murphy has enacted a series of social-distancing measures in recent weeks that are designed to slow down the spread of COVID-19 infections, including the closure of all nonessential businesses indefinitely.

“People are trying to prioritize what do I pay when I’m sitting on the sidelines,” said Thomas, whose organization is seeking an extension of the state deadline to July 15.

“Having the additional time would give folks some breathing room,” he said.

April 15 is fast approaching

Meanwhile, several Republican lawmakers have been raising concerns about the governor’s delay in action, noting the April 15 filing deadline is now just a few weeks away.

“Extending the state deadline gives filers more time to complete their returns, and more importantly, it provides additional time for those that will have a balance due,” said Sen. Anthony Bucco (R-Morris), who was a primary sponsor of the extension bill.

“I call on the governor to announce this filing deadline delay as soon as possible to provide some good financial news for hard-hit New Jerseyans,” said Assemblyman Ryan Peters (R-Burlington).

But Murphy, a first-term Democrat, suggested during Thursday’s briefing that he wants to see exactly what New Jersey ends up getting in the federal economic-stabilization measure that could get final approval as early as Friday before making a final decision on any state tax-filing extension.

For fiscal year 2020, the governor and lawmakers boosted state budget reserves in the $38.7 billion spending bill that was signed into law last June to over $1 billion. But that still represents a small percentage of overall spending, and it is much less than what many other states had in their reserve balances heading into this potential downturn, according to a recent state-by-state analysis by the Pew Charitable Trusts.

To help provide more of a cushion, the Murphy administration put nearly $1 billion in FY2020 discretionary spending in reserve late last week. But Murphy has also said repeatedly that federal aid will be necessary to help his administration navigate significant revenue losses expected in the final months of the current fiscal year.

“Knowing what’s in the federal bill, and knowing that it’s actually been signed into law, gives us a little bit firmer footing to look at what the next sort of 30 days looks like,” Murphy said on Thursday.

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Jersey City Projected to Lose $70M in Coronavirus Crisis


As cities and states across America battle the ongoing health crisis due to COVID-19, they will also have to brace for the economic impact that is coupled with it. Jersey City, which has 101 confirmed cases as of March 25, according to Mayor Steven Fulop, is no exception.

“It’s going to take time for us to recover, for our restaurants and small businesses to bounce back from this unimaginable crisis,” said the mayor. “That’s why we need help from the state and federal level.”

On Wednesday, March 25, Fulop shared that the anticipated budget impact for the city is expected to total $70 million consisting of $50 million in lost revenue loss and $20 million in added expenses.

The revenue loss comes from significantly decreased payroll tax collection, from the absence of municipal court fines, construction code fees and parking enforcement fines and from “other critical financial factors,” according to Fulop.

“There’s no playbook for us to follow on this, and we are looking to save money wherever possible to minimize the impact for residents,” he continued.

The $20 million in added expenditures is expected to be comprised of emergency purchases, increased health benefit costs and overtime.

Jersey City is not the only municipality facing economic hardship amidst the coronavirus outbreak. According to a tweet posted by the United Nations, the COVID-19 outbreak could cost the global economy a whopping $2 trillion in 2020.

Michael J. Hicks, an economist for Ball State University in Indiana, predicts that 17 percent of U.S. workers (1 in 6) will be laid off due to the impending economic crisis.

As the future seems uncertain, Jersey City is preparing for the worst.

“The City Council is not only focusing on our response to this current crisis and what our residents are going through, but we also need to plan for what lies ahead, and that reality comes with some really tough decisions,” said City Council President Joyce Watterman. “I’m really proud of how Jersey City has been a leader for those to turn to during times of hardship, and I know we’ll tackle the next difficult phase that we all inevitably face. It’s the unfortunate truth, but it’s better to be prepared than be blindsided.”

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