The New Jersey Supreme Court heard arguments Wednesday in a case about whether Gov. Phil Murphy’s administration should be allowed to borrow as much as $9.9 billion in response to revenue shortfalls caused by the coronavirus pandemic.
The lawsuit pits the Democratic governor and top Democratic state lawmakers against the state’s Republican party and several Republican legislators, who sued to block a plan they say would permit the administration to borrow for expenses unrelated to the pandemic and saddle future generations with a mountain of debt.
“Obviously COVID-19 has been a disaster that’s been felt worldwide, nationwide, statewide,” said state Sen. Michael Testa, R-Cape May, an attorney for the plaintiffs. “That doesn’t give the authority to our governor and the Legislature to essentially write a blank check to be used for anything.”
At issue is whether the plan, approved by the Democrat-controlled Legislature and signed by Murphy last month, qualifies as emergency borrowing under the state constitution and whether it can be done without voter approval.
“Plaintiffs are wrong that a ruling for the state would open up a Pandora’s box of borrowing,” said Assistant Attorney General Jean P. Reilly during oral arguments held over Zoom. “The crisis here is of a scope and magnitude comparable to only two other events in New Jersey’s 244-year history: the Civil War and the Great Depression.”
The justices pressed Testa on whether he was offering too narrow a definition of emergency spending, but they also asked Reilly why the bond act signed by Murphy did not specify that the borrowed money be used solely for causes related to the pandemic.
“Isn’t it better for the purposes for which the money is to be used to be included in the bond act rather than certifications later to justify it?” asked Justice Barry T. Albin.
Murphy has said the state could be short as much as $20 billion in revenue by the end of 2021, and he has continued to call for federal cash assistance from the Trump administration.
There is also a political angle to the lawsuit, which comes ahead of New Jersey’s gubernatorial race next year. Douglas Steinhardt, chairman of the state Republican Party, is reportedly mulling a run for governor. Another GOP candidate, former Assemblyman Jack Ciattarelli, joined the case as a “friend of the court.”
Chief Justice Stuart Rabner said the court would “take the matter under consideration,” but did not provide a timeframe for a possible ruling.
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