Public Spending, GOVERNMENT THAT WORKS
Politico: Coronavirus turmoil scrambles state budget talks, threatens pension gains
by Ryan Hutchins
The financial turmoil that has chased the coronavirus across the globe is threatening to upend state budget talks, reframe the debate about raising taxes in New Jersey and cause lasting damage to the already struggling public employee pension system.
Worries about the spread of the new virus and the government response — worsened by a war over oil prices — has fueled a massive U.S. stock market selloff that’s wiped out all gains since 2018. Thursday marked the darkest day on Wall Street since 1987’s Black Monday crash.
Major events are being canceled across the state. Ridership on NJ Transit has fallen dramatically in recent days. More and more companies are ordering employees to work from home. Schools are starting to cancel classes. Airports are empty. Bars in one city are being forced to shutter at 10 p.m. There’s a run on grocery stores. A recession is seeming likelier by the day.
“Panic will now set in,” David Rousseau, a state treasurer under former Gov. Jon Corzine, said Thursday as the Dow Jones and S&P 500 indexes shed 10 percent of their value, racing into bear market territory for the first time in 11 years.
What all of this means for state government may not be clear for months or even years. But it is sure to dominate the discussion in the coming months about Gov. Phil Murphy’s $40.9 billion proposed budget, including the debate about raising taxes on millionaires. State revenue projections, which previously included a $1.5 billion surplus, may change substantially this spring.
Read the full report here.