Gov. Phil Murphy on Wednesday called on lawmakers to pass a measure putting $1,000 aside for every baby born in New Jersey, beginning in January.
The first-term Democratic governor appeared alongside Paterson’s mayor, Andre Sayegh, state lawmakers, clerics and others, including first lady Tammy Murphy.
The governor unveiled the proposal for so-called baby bonds late last month when he announced his fiscal 2021 budget, but Wednesday’s event comes as lawmakers in Trenton hold hearings about the spending plan. It must be finalized by Sept. 30.
Before this crisis, economic inequality was at an all time high & it has only gotten worse. Today in #Paterson, @GovMurphy announced plans to create a statewide baby bond program to support families who need help most. The name of the game is the next generation. pic.twitter.com/tzQGKaCPRj
— Bill Pascrell, Jr. (@BillPascrell) September 9, 2020
Democratic U.S. Sen. Cory Booker had proposed similar legislation in Washington.
Murphy said New Jersey would be the first state with such a baby bond program if approved by the Democrat-led Legislature.
Murphy cast the proposal as a way to help lower-income families who have been especially hard hit by the economic downturn that stemmed from the response to COVID-19.
“It gives us hope that the generation being born in the midst of a pandemic may be able to do better than the one that lived through it,” Murphy said.
A closer look at how the program would work:
How many people would get the bonds?
Families of about 72,000 babies born in 2021 would benefit, the governor estimates. The bonds would go only to families who earn up to five times as much as the federal poverty level, or about $131,000.
Are there other requirements?
Newborns must be born in New Jersey or to parents who are New Jersey residents to be eligible for the bonds. The cash could be withdrawn once the recipient turns 18. Recipients must also be New Jersey residents to withdrawal the funds.
How much would the funds be worth in 18 years?
That depends on how the state manages the baby bond fund that Murphy wants to set up, but the governor said that returns would be at least equal to 30-year treasury bonds.
What could the funds be used for?
The bonds could be withdrawn for “allowable uses,” the governor said, like buying a home, financing higher education or starting a business.
How much would the program cost taxpayers?
Murphy budgeted $80 million for the program in its first year. It’s a fraction of the state’s nearly $40 billion budget but comes as the state’s finances have taken a downturn because of the coronavirus outbreak.
It’s also a new cost when Murphy estimates a nearly $5 billion shortfall, which he wants to close by borrowing $4 billion and raising taxes, particularly on the wealthy and businesses. He’s also proposed nearly $1 billion in cuts and other savings.