President Donald Trump’s administration on Thursday put conditions on state aid that could force New Jersey to give back some of the $1.8 billion it received from the federal government to help cope with the coronavirus pandemic.
And that prompted an angry Gov. Phil Murphy to vow he “will fight this to the death" and repeat his warning there could be massive layoffs of public workers — including teachers and first responders — if the state doesn’t get more help from the federal government.
The rules announced by the U.S. Treasury Department said states can only use those funds on the extra expenses they incur due to the coronavirus and not to help offset the drop in tax collections that is hindering their ability to fund state operations and pay their employees.
The money is part of the state’s share under the $2 trillion stimulus law, known as the CARES Act.
"Treasury’s guidance renders much of this funding literally unusable, and without additional flexibility, will mean we will likely not be able to use it, but we’ll have to return a good chunk of it to the federal government,” Murphy said during his daily press briefing in Trenton.
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“If the federal government doesn’t do its job and support New Jersey’s families, we may not be able to keep teachers, cops, firefighters, and paramedics employees — the very people who are on the front lines every day — and we’ll have to send this money back to Washington," the governor said.
“Sadly, the message from Washington to our first responders and to our educators is clear: As you work tirelessly to stop this pandemic, to keep people safe, our national leaders think you are not essential and that, in fact, you should fear for your jobs.”
Congress did not intend to restrict the use of the money when it passed the stimulus law, according to U.S. Rep. Josh Gottheimer, D-5th Dist.
Gottheimer, a member of the House Financial Services Committee that oversees the Treasury Department, said the funding was designed “to help plug the holes that resulted form the impact of the virus and to give states the flexibility to cover the massive loss to their budgets of revenue.”
"Just like any other natural disaster, clearly the whole idea is to help keep the state on its feet. I can’t understand why we would stick it to firefighters, law enforcement, EMS, and our schools. It an abomination.”
In addition, Murphy said he was assured during a recent discussion with U.S. Treasury Secretary Steven Mnuchin, that states would have more flexibility in how they spent the money.
“I was assured this funding would be able to be used flexibly by states, filling holes that we now must deal with," Murphy said. “Those assurances apparently were empty."
U.S. Sen. Robert Menendez, a member of the Senate Finance Committee that also oversees Treasury, said Mnuchin told him the same thing.
“I took Secretary Mnuchin’s word in good faith when he told Governor Murphy and me that states would have flexibility to use these stabilization funds to address their urgent needs and maintain essential services,” Menendez, D-N.J., said.
"The Treasury guidance also flies in the face of the president’s recent commitment that any fiscal relief to hard-hit states be allowed to cover lost revenues as a result of COVID-19.”
Murphy and governors of both parties, led by the National Governors Association, continue to push Washington for more aid as record unemployment and businesses closings thanks to stay-at-home orders to fight the virus have left their states with crumbling tax revenue.
Menendez has introduced legislation to provide $500 billion in state aid with no strings attached, as well as remove any restrictions on the first round of assistance.
On Wednesday, U.S. Senate Majority Leader Mitch McConnell, R-Ky., said he wasn’t in favor of more funding and suggested states should be allowed to file for bankruptcy instead.
“There’s not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations,” McConnell said during a radio interview.
That sparked an fiery rant from Murphy, who said during his press briefing Wednesday that McConnell’s comments were “completely and utterly irresponsible” and that a lack of state aid would lead states to institute massive layoffs and “gut the living daylights” out of “the exact services that our citizens need right now."
Murphy continued to criticize McConnell on Thursday, saying that the Senate leader comes from the party of Abraham Lincoln, Theodore Roosevelt and Ronald Reagan.
The governor called them "three American presidents who, when faced with challenges, founds ways to meet those challenges, to be greater than those challenges, to rise up."
“This isn’t about partisanship,” Murphy said. "This is about America and doing what’s right.”
New Jersey, a state of 9 million people, has seen at least 99,989 COVID-19 cases and 5,368 related deaths as of Thursday afternoon, officials said as they announced 4,227 new positive cases and 307 new deaths. Only New York has more cases and deaths among U.S. states.
Meanwhile, another 140,139 New Jersey workers filed for unemployment last week, bringing the state’s record total of unemployment claims to more than 858,000 in the five weeks since aggressive social distanci began.
Even as and deaths continue to rise in New Jersey, state officials have said the rates of infections, hospitalizations, critical care admissions, and ventilator use has been leveling off in recent days.
Still, while officials said North Jersey has likely seen its peak in hospitalizations, Central Jersey is now seeing a surge in patients as the outbreak moves south.
And Murphy has said the Garden State needs to keep its sweeping lockdown orders in place for at least another few weeks. He has said the curve of cases and deaths needs to drop and testing needs to be broadened before the state can begin to gradually lift restrictions.
The governor has also been warning that the state needs to prepare for a second wave of the virus in the fall and winter that experts say is probable.
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Brent Johnson may be reached at bjohnson@njadvancemedia.com.
Jonathan D. Salant may be reached at jsalant@njadvancemedia.com.