NJ Freezes Nearly $1B in Spending, Citing Coronavirus Crisis

NEW JERSEY – The Murphy administration froze $920 million in spending on Monday to deal with the financial and medical fallout from the coronavirus crisis. The state also expects to extend the tax deadline by as long as three months (see list below).

The number of cases rose to 2,844 on Monday, and 27 people have died as the coronavirus outbreak continues to significantly impact New Jersey's hospitals and economy. Read more: NJ Coronavirus Updates: Here's What You Need To Know

State Treasurer Elizabeth Maher Muoio said the impact of COVID-19 on the state, its economy and budget and finances is "unpredictable and rapidly changing, but the state believes that events surrounding COVID-19 will negatively impact the state’s economy and financial condition."

Among the major items of appropriations placed in reserve is funding for the Homestead Benefit credit. The state is in the process of notifying towns that any credits intended to be applied to the May 1 bills can no longer be supported at this time.

The state is prepared to reimburse any municipalities for the administrative costs if they have to issue revised property tax statements, Muoio said.

Other negative impacts that the state has currently identified include:

• The state expects precipitous declines in revenues in Fiscal Year 2020 and Fiscal Year 2021, which include significant reductions in gross income tax revenues, corporate business tax revenues and sales tax revenues. The declining revenues come as Gov. Phil Murphy has issued a "stay-at-home" order that shut down non-essential businesses. Read more: Gov. Murphy Announces NJ 'Stay-At-Home' Order Due To Coronavirus
• The state expects it will need to significantly revise the estimated revenues and projected appropriations for Fiscal Years 2020 and 2021 contained in the governor’s budget message for Fiscal Year 2021. Read more: 6 Points In NJ Gov. Phil Murphy's Budget Address That Affect You
• The state expects to encounter negative impacts on its liquidity in Fiscal Year 2020 due to the expected extension of the state tax filing deadline from April 15 until potentially July 2020.
• It is possible that the state may encounter future increases in the state’s recommended contributions to its pension plans, and the stock market crash may have had an impact on that.

Muoio said it is likely that the full fiscal impact of COVID-19 on the state will change significantly as the situation further develops.

"The actual impact of COVID-19 on the state, its economy and its budget and finances will heavily depend on future events, including future events outside of the control of the state, and actions by the federal government as well as nations across the world," she said. "The state believes that it may be some time before the state is able to determine the full impact that the various events surrounding COVID-19 have on the state’s economy, and its financial condition.”

A full list of appropriation items that have been placed in reserve spending freeze includes: