In major blow to Murphy, nonpartisan OLS says N.J. can’t borrow to balance budgets

TRENTON, N.J. – Governor Phil Murphy’s hopes to dig New Jersey out of an anticipated budget hole with borrowing hit a major snag on Thursday when the Office of Legislative Services (OLS), the state legislature’s nonpartisan legal arm, issued an opinion affirming that the state cannot borrow money to balance future budgets.

“In conclusion, The COVID-19 pandemic is a disaster that that has resulted in an emergency as contemplated by the New Jersey Constitution,” wrote Neal Lang, OLS’s Associate Counsel. “Accordingly, the State may borrow money to meet the emergency caused by COVID -19 without voter approval and without violating the debt limitation clause. The proceeds of the bonds are borrowed money and may be used to pay for equipment and expenses directly related to COVID-19. This opinion sets forth justification for using borrowed money to pay for COVID-19 related equipment and to meet the needs of the State previously determined when the FY2020 budget was enacted.”

“However, borrowed money may not be used to replace general revenue to support non-COVID-19 related spending in future budgets,” Lang continued. “What future expenses are directly related to COVID-19 is a matter to be resolved jointly by the Legislative and Executive Branches through the legislative process, including future budget acts.”

Click here to read the letter.

The N.J. Supreme Court already ruled on this issue more than once in recent years.