New Jersey extends budget deadline amid revenue losses from coronavirus
New Jersey is extending its 2020 fiscal year calendar by three months in an effort to fully gauge the state’s economic fallout from the ongoing COVID-19 pandemic.
An agreement was reached Wednesday to extend the state’s deadline for a new 2021 fiscal year budget to Sept. 30 from June 30, Gov. Phil Murphy announced jointly with Senate President Steve Sweeney, D-Gloucester, and Assembly Speaker Craig Coughlin, D-Fords. The budget deadline extenson, which was the first executed by any state in the nation, was made in anticipation of revenue hits as New Jersey grapples with lost sales tax collections with non-essential businesses shut down to fight the virus. The Murphy administration is also anticipating liquidity challenges from postponing the tax-filing deadline from April 15 until July 15.
“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,” Murphy, Sweeney and Coughlin said in a joint statement.
The Murphy administration began bracing for revenue losses last week when State Treasurer Elizabeth Maher placed $920 million of spending appropriations into reserve to protect the state from financial uncertainty stemming from COVID-19. Murphy’s $40.9 billion budget proposal unveiled on Feb. 25 hinges largely on $500 million of estimated revenue from a millionaire’s tax lawmakers have fought the governor on the last two years.
Marc Pfeiffer, assistant director of Rutgers University’s Bloustein Local Government Research Center, noted that since New Jersey has never previously extended its fiscal year that lawmakers would face a learning curve crafting the budget amid many financial unknowns. He said a major unknown is how spring revenue collections shake out and whether the state gets any boost in capital gains taxes resulting from the recent market selloff.
“It will take time for the people in Trenton to figure this,” Pfeiffer said. “This extension will help the state get clarity and make more informed choices.”
New Jersey’s general obligation bonds are rated A3 by Moody’s Investors Service, A-minus by S&P, and A by Fitch Ratings and Kroll Bond Rating Agency. The Garden State incurred 11 credit rating downgrades from 2011 to 2017 under former Gov. Chris Christie due largely to a rising pension burden and structurally imbalanced budgets.