NJ Politics Digest: Should State Save for a Rainy Day or Pay Off Its Looming Debts?

New Jersey State Treasurer Elizabeth Maher Muoio in 2017.

New Jersey State Treasurer Elizabeth Maher Muoio in 2017. Joan Eddis-Koch/Flickr

It’s no secret that New Jersey is in pretty bad financial shape. And as Gov. Phil Murphy and Democratic leaders in the legislature square off for another battle over the state budget, one big question is whether or not the state should be using some of its surplus cash to replenish its “rainy day” fund.

Those savings were depleted during the great recession, and—as NJBiz reports—a new study shows the overtaxed state is just one of three in the nation that now doesn’t have such savings.

State Treasurer Elizabeth Maher Muoio says New Jersey needs to dedicate money to the rainy day fund. This as Murphy is pushing for a millionaires’ tax to fund a host of new initiatives to advance his progressive agenda, including free community college tuition for low-income residents and funding electric vehicle charging stations. Murphy has also promised a one-time $125 credit toward property tax relief to try to encourage support for the millionaires’ tax.

Meanwhile, Senate President Steve Sweeney contends the state must first get its fiscal house in order, adopting his plan to reduce state spending while also paying toward its outstanding obligations before it starts rebuilding the rainy day fund. Murphy, who is an ally of the state’s powerful public workers’ unions, has show little appetite to engage in spending reform.

The two men must agree on a budget by July 1 or face a state government shutdown. The likelihood of a shutdown is growing, with InsiderNJ reporting that there is enough support in the state Assembly to adopt a budget that doesn’t contain a millionaires’ tax, possibly forcing Murphy to veto the budget.

Quote of the Day: “I don’t know how you talk about putting money into a rainy day fund when it’s pouring in New Jersey. A rainy day fund is when you have everything funded and everything’s fine. But it’s not [fine] in New Jersey,” — Senate President Steve Sweeney on the state’s need to use surplus funds to pay off existing obligation before it starts saving.

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NJ Politics Digest: Should State Save for a Rainy Day or Pay Off Its Looming Debts?