Tuesday, July 27, 2021

How NJ Should Spend $6.5 Billion . . .

New Jersey state Senator Sam Thompson and Senator Michael Testa, both Republican members of the Senate Budget Committee, provided written testimony for the Murphy Administration’s virtual American Rescue Plan Hearings scheduled for this afternoon and tomorrow morning.

Senator Sam Thompson and Senator Michael Testa, both Republican members of the Senate Budget Committee, provided written testimony for the Murphy Administration’s virtual American Rescue Plan hearings. (Pixabay)

The Senators’ comments, submitted online prior to the Tuesday hearing, are presented below:

Statement from Sen. Sam Thompson, LD 12
Submitted for:
American Rescue Plan Hearings
July 27 & 28, 2021

New Jersey has known about this almost $6.5 billion federal block grant since March when Congress enacted it.  All of the cash has been in the bank since May.  And the federal rules guiding its use have been in place for months.

It is disappointing that in light of the immense needs that we are only now getting around to letting people make a pitch for how it should be spent.

My Senate Republican colleagues and I publicly proposed an outline of how to spend this money back in May.  Our proposal in its entirety can be found easily enough on our web site with a simple google search.   We first issued it in May and then again on June 7 as a formal budget resolution.  Both proposals are easily found on our web page.

To summarize our proposal:

  • $2.5 billion was to stabilize the Unemployment Insurance Fund. Other states are doing it.  It will head off tax increases on employers – including small businesses and nonprofits still reeling from COVID 19 – that will otherwise be phased in with a first increase retroactive to July 1 this year.
  • $1 billion in additional assistance for small employers, including nonprofits, still recovering from COVID 19. Their assistance to date has only trickled out and it has been insufficient.  Forty percent business closures have proven that more is needed.
  • $500 million to provide additional relief for middle class renters and, indirectly, their landlords, who have been left out of limited support programs.
  • $1.5 billion for capital projects by the State, schools (both public and private), higher education, local governments, libraries, authorities, and third-party service providers.
  • $500 million to modernize antiquated IT systems, including but not limited to UI and MVC systems that provide unacceptably poor service to citizens and do not have the capacity to handle impacts from COVID 19 and future pandemics.
  • $500 million for school funding to restore budget cuts over three years as schools and economy stabilize post pandemic.

The first two proposals that support employers are critical if New Jersey is going to reverse its fifth worst unemployment rate – 7.3% — in the country.  Over four years, New Jersey’s unemployment rate went from being in the middle of the pack to … now … the fifth worst.  That is unacceptable.  Some of the reasons for our outlier unemployment rate include anti-employer mandates, high taxes, and EDA tax credit programs that expired and were only recently reinstated.

But make no mistake.  Part of the reason is a mismanagement of COVID 19.  Businesses shutdowns were draconian, and one quarter of a previous federal block was abused to pay for $600 million of previously budgeted state employee salaries and benefits.  Only a fraction of that amount was used to support crushed employers – and even then, the money that was provided was delayed endlessly.

Don’t make the same mistake of squandering federal money by just washing it into the State’s budget. Get it into the hands of employers quickly.  Stop impending tax increases on all employers. Reverse this administration’s poor performance on jobs.


Statement from Sen. Michael Testa, LD 1
Submitted for:
American Rescue Plan Hearings
July 27 & 28, 2021

Let me get straight to the point. New Jersey’s unemployment rate is now one of the worst in the country. We stand at 7.3 percent, and only five states have a worse unemployment rate. Getting help to employers needs to be a priority.

One of the reasons we are an outlier with the worst unemployment rate in the U.S. is that employers – not just big corporations, but small employers and nonprofits, too — have continually been abused. To this administration, businesses have always been an afterthought when it comes to assistance.

Last year’s use of the $2.4 billion CARES block was a perfect example of the administration “putting employers last.” We cannot make that mistake with this round of federal funding.

Despite the severe economic damage inflicted on business and nonprofit employers during the pandemic, help from CARES Act funds was very slow arriving. EDA grant programs were opened with $5 million in April 2020, and funding ran out an hour after the applications were accepted.

My colleagues and I supported the pleas of businesses and nonprofits. We repeatedly requested that substantial levels of CARES money be set aside as grants to help them. We sponsored legislation to that effect — with one bill being vetoed.

Meanwhile, one quarter of CARES Act money — $600 million — was spent on previously budgeted salaries and benefits for State workers, even though there was never a risk that they would not be paid.

The effect was to launder federal money into the State budget with no relief going to anyone who was suffering.

To prevent that from happening again, my Senate Republican colleagues and I publicly proposed an outline of how to spend this new money back in May. We submitted the proposal on June 7 as a formal budget resolution. Our proposal in its entirety can be found on our web site with a simple Google search

I won’t repeat the proposal, but I want to emphasize two parts of it.

One priority is to make available $1 billion of federal funds to support employers, with an emphasis on small businesses and nonprofits that continue to suffer.

As the administration hints it may be considering more closures to respond to the Delta variant, the need for assistance is overwhelming and obvious.

If our unemployment rate that is among the worst in the country is not proof enough, a walk down any Main Street will reveal a glut of empty store fronts and “for lease” signs. The economy cannot afford another slow trickle of symbolic aid.

Second, use $2.5 billion to stabilize the Unemployment Insurance Fund. That fund is currently insolvent and mired in debt. Without federal money being used to stabilize the fund, employer tax increases reaching $1.5 billion per year will be phased in, retroactive to July 1.

If you fail to use these funds this way – as other states are doing on a bipartisan basis – the unemployment rate will continue to be an outlier and an obvious failure of this administration.

It is time to take a breath from employer mandates and jacking up taxes, which is killing our economy. Finally make employers a priority with these funds. Help restore the dreams the excessive COVID closures destroyed. Stop the tax increases on employers that are imminent if you once again waste money by laundering it into the State budget while people suffer.

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