NJBIZ- The Trump administration relaxed rules on how New Jersey can use $2.4 billion of federal COVID-19 relief aid, Gov. Phil Murphy said on Tuesday.
“We’ve received greater flexibility in how we can use this money – which means more of it will stay here in New Jersey to backstop our efforts against COVID-19,” Murphy said at his daily COVID-19 press briefing in Trenton.
In total, the state will see $3.4 billion under the $2.2 trillion federal stimulus bill – the nation’s largest ever spending bill – which U.S. President Donald Trump signed on March 27.
The flexibility means the state will, this Friday, use $467 million from the federal aid toward school aid payments, Murphy said.
On April 22, the Trump administration said it was restricting states from using dollars from the CARES Act – or the Coronavirus Aid, Relief and Economic Security Act – to make up for revenue lost during the pandemic, as well as to pay for expenses that a state or local government already budgeted as of March 27. It is not immediately clear which, if any, of these restrictions, were rescinded.
The $3.4 billion ultimately, is still far below the $30 billion shortfall New Jersey will experience through June 2021, and a “fiscal disaster” weeks away as the state’s finances collapse amid a global pandemic.
“We’re not out of the woods yet. This funding was already accounted for in our cash-flow planning – we just didn’t know if
Congress would let us use it,” Murphy added. “We still have a long way to go.”
Murphy on Monday warned he might have to lay off thousands of state workers and slash public services to balance the budget, which has to be signed by Sept. 30.
To contain and blunt the impact of the COVID-19 outbreak, Murphy and governors across the country have placed their states in near-total lockdown. The process has shown many signs of working; such as a slow and steady drop in new positive cases, hospitalizations and fatalities.
But in the process, commerce in New Jersey has come to a screeching halt, and revenue from the state’s income, gas, corporate business, sales, lottery and gambling taxes have evaporated, as well as tolls and transit fares has dried up.
Murphy, a Democrat, has made several pleas to the Trump administration to push for more aid to states, but Trump, a Republican, has remained cool on the proposal, calling it a “tough question.”
Trump and Senate Majority Leader Mitch McConnell, a Republican from Kentucky, have shown resistance to state aid, worrying that the money might end up going toward financing underfunded public retirement systems, of which New Jersey’s is often considered the worst.
“This is to allow us to keep firefighters, teachers and EMS on payroll, serving communities in their hour of need,” Murphy responded. “We don’t see this as a bailout, we see this as a partnership.”
The congressional delegations for New York and New Jersey are seeking a combined $40 billion of federal aid for states, proposed under a fourth landmark stimulus bill in Congress.