New Jersey’s unspent COVID-19 relief dollars

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From replenishing New Jersey’s depleted unemployment account to funding the risk premium for frontline workers, there is no shortage of ideas on how the state should use its remaining COVID-19 federal relief dollars.

So far, about a third of the more than $ 6 billion in aid New Jersey has received through the American Rescue Plan Act has been allocated by Gov. Phil Murphy and lawmakers for specific purposes, including rent assistance and financial assistance to childcare providers.

Murphy – a Democrat for the first term due to be re-elected next month – has hosted a series of virtual events to gather feedback from various groups and individuals on how to use the balance of federal aid in the event of a pandemic.

Many called on the governor to be more urgent and tackle key issues exposed by the health crisis, such as New Jersey’s still high unemployment rate.

But Murphy said last week that his administration’s primary goal is to ensure that remaining federal dollars are used to “invest responsibly and prudently in the state.”

By law, New Jersey has until the end of 2024 to commit the balance of its federal aid, and even longer to spend it. And federal officials have made it clear they want COVID-19 relief to maintain a long-term recovery from the still-ongoing pandemic.

Coronavirus State Budget Recovery Fund

In addition to funding direct stimulus payments to individuals and expanding improved unemployment benefits, the American Rescue Plan Act also set aside $ 195 billion to fund the Coronavirus State Fiscal Recovery Fund.

This money was sent to states in addition to assistance provided to fund other more specific goals, such as the $ 2.7 billion for schools in New Jersey.

New Jersey received its share of state stimulus funding – $ 6.24 billion – on May 19, according to the state’s Treasury Department.

Relief funding is supposed to support the public health response to the pandemic and lay the groundwork for a “strong and fair” recovery from the economic downturn triggered by the health crisis, according to a US Treasury Department fact sheet. .

What NJ is doing so far with his relief dollars

Murphy and state lawmakers agreed in late June to set aside about $ 2.4 billion of his share of the state’s salvage dollars for specific purposes. They have earmarked $ 500 million in rent assistance and an additional $ 250 million to help those who fell behind on their utility bills during the pandemic.

An additional $ 450 million is being made available to so-called Level I trauma centers in New Jersey and a $ 100 million child care revitalization fund has also been established using the federal dollars. The state will also spend $ 600 million over the next three years to fund additional special education services using federal relief money, according to Murphy and lawmakers.

What about the remaining funds?

With the deadline for spending all federal dollars still years away, Murphy and lawmakers agreed to some ground rules earlier this year for how the remaining funds can be allocated. And unlike previous installments of federal aid, the deal gives a direct role to the Legislative Assembly’s bipartite and bicameral Joint Budget Oversight Committee.

Under the agreement, the Murphy’s administration can spend up to $ 200 million of the unallocated portion of federal aid for specific purposes without committee approval, as long as no expenditure exceeds $ 10. millions of dollars.

For example, the administration’s recently announced “Return and Earn” program, which offers financial incentives to the unemployed and businesses to promote re-employment and job training, is funded by the $ 10 million American Rescue Plan Act. , according to the Murphy administration.

More than 2,000 companies have already contacted the Department of Labor and Workforce Development to show interest in participating in the program, Murphy said last week.

“I can’t wait to see Return and Earn help both our small businesses and our workers move forward,” he said.

Looking for more aggressive action

But many Republicans and business groups want the governor to be more aggressive in addressing the lingering economic challenges brought on by the pandemic. They also criticized him for not already stepping in to completely blunt a mandatory payroll tax hike for businesses that went into effect earlier this month to ensure the state’s depleted unemployment fund is replenished.

Instead, Murphy earlier this year enacted a bipartisan bill that spread the tax hike over three years.

Meanwhile, Republican lawmakers, who are in the minority in both houses of the legislature, say they are also drafting legislation that would allocate $ 200 million in federal funding to address “critical need areas” of the legislature. computer technology that were identified in a recent report from the technical director of the state.

The allowance would be used to update the computer systems of the Department of Labor and Workforce Development which faltered during the pandemic as the state was inundated with record claims for unemployment benefits, according to the reports. GOP lawmakers.

“At some point this job needs to be done, as the (report) indicated,” said Sen. Anthony M. Bucco (R-Morris). “If we don’t act now when federal dollars are available, New Jersey taxpayers will be forced to pay later. “

Meanwhile, during its recent invite-only events on New Jersey’s remaining federal salvage dollars, the Murphy administration has heard dozens of other recommendations from a wide range of interest groups and individuals.

They included calls to better respond to New Jersey’s affordable housing shortage, rebuild aging drinking water infrastructure, and support residents of communities that have been disproportionately affected by the pandemic.

And earlier this year, a coalition of interest groups called “For the Many” sent a letter to Murphy and legislative leaders urging them to use federal funds to “stabilize struggling residents and protect their children from harm. long-term effects of deep poverty.

“The easiest way to increase the household income of families who lived paycheck to paycheck is to provide direct cash payments with no strings attached and regardless of immigration status,” says the letter.

Worth the wait

A recent story published by the Associated Press indicated that many states and major cities that have qualified for federal pandemic aid are still deciding how to allocate their share of relief funding.

Acknowledging that the health crisis will likely have a lasting effect on states and cities, an official in President Joe Biden’s administration told the PA they were given plenty of time to spend the aid dollars specifically. to ensure “a sustainable and equitable recovery”.

Meanwhile, in New Jersey, a recent increase in state tax revenue and a major emergency borrowing problem gave the state enough equity earlier this year to balance the budget while also solving some long-standing budgetary problems, such as the flagrant underfunding of the workers’ pension system.

With the state’s revenue outlook less certain as the pandemic emerges, withholding some of New Jersey’s federal aid could in many ways support a state surplus account that currently stands at around 5% of the world’s largest. of $ 46 billion in total budgeted spending for the current fiscal year.

Policymakers on both sides are also hoping to avoid a repeat of what happened in New Jersey following the Great Recession of 2007-2009. Federal state stimulus aid was only used in one fiscal year, but fiscal gaps persisted in subsequent years.

Have your say

The Murphy administration has created a website that keeps a current account of the COVID-19 help New Jersey has received from the federal government. The website also details how these dollars have been spent or allocated so far.

The administration also gathered written comments from the general public on the use of remaining American Rescue Plan Act funding. They can be sent to the following [email protected]


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