Governor Murphy, Economic Opportunity for All
NJ Spotlight: Explainer: Checking the Math Behind Murphy’s $10B Budget-Shortfall Estimate
By John Reitmeyer
It’s an attention-grabbing number: $10 billion. That’s how much Gov. Phil Murphy says the state is short due to the economic fallout following the lockdown ordered to stop the spread of the coronavirus.
“The revenue losses we can already project stemming from our current emergency are drastic — $10 billion, over the next, slightly more than, calendar year,” Murphy said during a media briefing on May 22.
That $10 billion figure has been oft-repeated since. It’s coming up again as lawmakers are being asked by the governor to approve an emergency-borrowing proposal that allows for at least $5 billion in long-term debt to be issued to help the state manage the projected shortfall.
Murphy himself has caused some confusion on the shortfall issue by initially telling President Donald Trump in a late-April meeting in the White House that New Jersey was in need of up to $30 billion in federal assistance. His administration has since clarified that statement, saying it incorporated a rough estimate of a worst-case scenario for state-revenue losses, as well as a best guess at the cost of potential spending as part of the response to the health crisis.
But how real is that $10 billion figure? Where did Murphy get it?
Several weeks ago, the New Jersey Department of Treasury put forward new revenue projections that account for the different ways the coronavirus pandemic is expected to impact state tax collections this year, and through the middle of 2021.
Those projections covered parts of two fiscal years; combined, they forecast a nearly $10 billion gap between ambitious spending goals that Murphy’s administration announced before the pandemic hit and those that are being reset to keep the budget in balance in the wake of the health crisis.
Here’s a more detailed breakdown of how Treasury calculated the two-year budget gap.
Read the full report here.