Governor Says New Jersey Will Need ‘Revenue Raisers’ to Balance Budget

(Bloomberg) -- New Jersey Governor Phil Murphy hinted at tax increases for next fiscal year, saying the state will need “revenue raisers” to balance the budget and recover from the pandemic.

The $7.6 billion stopgap budget Murphy enacted through Sept. 30 contained no new taxes. That won’t be the case for the fiscal 2021 budget, which is due to lawmakers on Aug. 25, he said Thursday during an interview with Bloomberg Television.

“We’re going to have to put some revenue raisers on the table as we go to our next budget,” he said.

Murphy’s statement on revenue increases is more definitive than those in past weeks. When previously asked about the possibility of raising or adding taxes and fees, Murphy had given a more general answer, often saying “everything is on the table.” The governor has been more vocal about the need for federal aid -- as well as state approval to borrow -- to deal with tax-revenue losses because of the lockdown he imposed March 21.

Though Murphy in recent weeks has eased some restrictions, he’s made good on a promise to pull back if the virus again takes hold. He scuttled a July 2 return to indoor dining as the daily transmission rate started climbing to above 1, indicating the virus is spreading. Restaurants can open indoor service now only if their design allows two sides to open for increased air circulation.

The indoor restaurant restrictions “bring me no joy,” Murphy said, “but it’s quite clear this virus is more lethal inside than it is outside.”

Enforcing Quarantines

To slow the spread, Murphy joined the New York and Connecticut governors on June 24 to demand 14 days of quarantine for visitors from states whose test rates are higher than 10 per 100,000 residents or that have a positivity rate above 10%, each over a seven-day rolling average. Nineteen states, including Arizona, California, Florida and Texas, are on the list.

Murphy, 62, a first-term Democrat, said Thursday that he legally can’t stop people who live in or visit hot spot areas from entering his state. Fines, warnings and other measures are within the state’s rights, Murphy said, but it’s also “a big appeal to personal responsibility.”

“I’d love to be able to build a wall around us, either our state or our region,” Murphy said jokingly. “It is the United States.”

Murphy said he knew that reopening would be a risk for New Jersey, but “what we were not expecting was the explosion of cases elsewhere in the country.”

Until recently, New Jersey had the second-most cases of Covid-19 in the U.S., after New York. After recent surges, the Garden State now trails states including Texas, California and Florida.

“The rate of transmission has gotten uncomfortably high for us,” he said.

Murphy started reopening on May 2, allowing visitors to state parks and golf courses. Later that month he allowed nonessential retail curbside pick-ups, in-person automobile and motorcycle sales and elective surgeries to restart. On June 15 he reopened child care and outdoor dining and allowed nonessential retail stores to open with limitations. Since July 1, he has allowed youth day camps, indoor pools and outdoor graduation ceremonies, returned New Jersey Transit rail to full weekday service and reopened motor-vehicle commission offices.

On Wednesday, after the transmission rate creeped up again to 1.10, Murphy ordered New Jerseyans to wear face coverings outdoors in situations where social distancing is impossible -- for instance, on an oceanside boardwalk or in a queue awaiting entry to a store. The order doesn’t apply to people outdoors alone or with their families.

The transmission rate was 1.04 on Thursday, according to the governor’s office. It was more than 5 in March and had dropped to 0.62 in early June.

Murphy’s administration has predicted a $10.1 billion revenue shortfall through June 2021. He lengthened the current fiscal year by three months, through September, cutting or pushing off $5 billion in expenses to a shortened fiscal 2021. The governor has asked the legislature to approve borrowing billions of dollars to plug budget gaps starting on Oct. 1, a step that likely would meet a challenge from Republican lawmakers who say the state constitution disallows such financing.

©2020 Bloomberg L.P.