Federal assurances on use of bailout funds “were apparently empty”

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Governor Phil Murphy | AP Photo

Governor Phil Murphy | Seth Wenig / AP Photo

Governor Phil Murphy criticized the Trump administration on Thursday for “empty assurances” about how New Jersey could use billions of dollars in Covid-19 bailout funds after the US Department of the Treasury issued guidelines on the how the money could be spent.

The guidelines require that money from the Coronavirus Act respecting aid, relief and economic security (CARES), HR 748 (116), be used for “necessary expenses incurred due to the public health emergency regarding coronavirus disease 2019 ‘which were initiated between March and December of this year.

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The guidelines specifically prohibit state and local governments from using the funds as a form of income replacement.

Murphy said during his daily briefing in Trenton that he was “confident that this funding could be used flexibly by states, filling the gaps we now face.”

“These assurances were apparently empty. Treasury directives make much of this funding virtually unusable, “said Murphy, adding that the state could end up” returning much of it. “

Murphy’s chief counsel, Matt Platkin, said at the briefing that the boards mean that the state cannot use the funds for everything it had planned before the pandemic.

“As we fall from a budgetary cliff, this money that has been invested in the CARES law is of very little use to us,” said Platkin.

“Unfortunately, Washington’s message to our first responders and our educators and others on the front line is clear: as you work tirelessly to end this pandemic, to keep people safe, our national leaders believe that you are not essential and you should in fact fear for your job, “said Murphy.

New Jersey has barely 100,000 known cases of coronavirus and more than 5,300 residents have died from the disease since early March. Murphy has ordered the closure of all “non-essential” businesses, which should deplete the state’s tax revenue. Under the state constitution, the New Jersey state budget is not allowed to run a deficit.

“If the federal government doesn’t do its job and support New Jersey families, we may not be able to keep our teachers, cops and paramedics – the same people who are on the front lines every day, and we will have to send that money back to Washington, “said Murphy.

Murphy, a progressive Democrat and former diplomat, lessened his criticism of President Donald Trump as the state sought help to fight the coronavirus, but it is the second time in as many days that he has run up against in Washington about funding.

On Wednesday, Murphy criticized the majority leader in the Senate, Mitch McConnell, who suggested that states should consider declaring bankruptcy instead of asking for federal bailouts.

“At the very least, we should be able to support our people and help maintain the funding that municipalities and school districts as a whole expect to maintain,” said Murphy.

Murphy doubled his remarks at Thursday’s briefing, saying that the income shortfalls New Jersey faces as a result of its Covid-19 mitigation efforts apply to “many of our sister states – red and blue” .

“Senator, if you look, remember you are from Abraham Lincoln, Theodore Roosevelt and Ronald Reagan; three American presidents who, faced with challenges, have found ways to meet these challenges, to be bigger than the challenges, to rise up, “said Murphy, referring to McConnell. “They did not get small, they got big at that time, and that is the challenge, senator, for you and for all the leaders of this country.”

Murphy has repeatedly said that New Jersey would need global federal subsidies to avoid the calamities, including “historic” layoffs for much of the state’s public workforce.

While Murphy pointed to first responders and schools in his response to directives from the Treasury Department, he did not say that the New Jersey pension system, which is underfunded by about $ 100 billion, does would likely not be eligible for rescue with federal funds.

Murphy’s $ 41 billion state budget in February – which he and the Legislative Assembly pushed back by three months until September 1 and acknowledged that it will have to change significantly – includes a pension payment of 4.6 billions of dollars.

Sam Sutton contributed to this report.

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