NJ Spotlight: Murphy to Sign Bill for July 15 Tax Filing, Moody’s Downgrades NJ’s Rating Outlook - Garden State Initiative

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NJ Spotlight: Murphy to Sign Bill for July 15 Tax Filing, Moody’s Downgrades NJ’s Rating Outlook

April 14, 2020

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by John Reitmeyer

Gov. Phil Murphy is planning to sign into law today legislation that will officially delay New Jersey’s income-tax filing deadline and also extend the term of the state’s fiscal “year,” all in response to the ongoing coronavirus pandemic.

Murphy’s pending action on the legislation — which he signaled in a statement issued late Monday — sets the stage for New Jersey to become the only state in the country to delay the closing date of the current fiscal year in the wake of the still unfolding pandemic.

New Jersey is also on course to become the last state in the country that levies a state income tax to officially approve a filing extension beyond the traditional April 15 deadline. The new filing deadline is July 15.

Lawmakers rushed both proposed fiscal-policy changes to Murphy’s desk in a matter of days, citing the urgency of the growing pandemic.

State’s credit rating outlook takes a hit

The final votes held in both the Assembly and Senate on Monday also coincided with a move by Moody’s Investors Service, a major Wall Street credit-rating firm, to lower the state’s rating outlook from “stable” to “negative.” The impact of the pandemic on the state’s finances and the likelihood of “elevating already-high liabilities” were cited as key factors by Moody’s.

Murphy also joined on Monday with the governors of several Northeast states to announce the launching of a formal planning process that is intended to generate a coordinated approach to resuming normal activities once the worst of the pandemic has passed.

“An economic recovery only occurs on the back of a health-care recovery,” Murphy said on a conference call with the governors of Connecticut, Delaware, New York, Pennsylvania and Rhode Island.

The Murphy administration has yet to release a formal analysis of the impact they expect the pandemic to have on the state’s revenue stream, but the fallout is likely to be significant since New Jersey has been among the hardest-hit states, trailing only New York in reported COVID-19 infections and fatalities.

The Department of Treasury has already frozen nearly $1 billion in fiscal year 2020 spending in response to the pandemic, but the state entered into the economic downturn with limited budget reserves compared with those of many other states, leaving very little margin for error as the revenue losses and new expenses have started to pile up.

Read the full report here.