(Bloomberg) — The U.S. Treasury Department is sending a message to states and cities that the billions in aid from the American Rescue Plan should provide relief to residents, not their governments’ debt burdens.
The department on Monday released guidance on how state and local governments can use $350 billion in funding from President Joe Biden’s $1.9 trillion rescue package. The funds are intended to help states and local governments make up for lost revenue, curb the pandemic, bolster economic recoveries, and support industries hit by Covid-19 restrictions. In a surprise to some, these funds can’t be used for debt payments, a potential complication for fiscally stressed governments that had already etched out plans to pay off loans.
Illinois Governor J.B. Pritzker had suggested using some of the state’s $8.1 billion in aid to repay the outstanding $3.2 billion in debt from the Federal Reserve’s emergency lending facility and to reduce unpaid bills. Illinois was the only state to borrow from the Fed last year, tapping it twice. On Tuesday, Jordan Abudayyeh, a Pritzker spokesperson, said the administration is “seeking clarification” from the Treasury on whether Illinois can use the aid to pay back the loan from the Fed.
The rule could also affect New Jersey, which sold nearly $3.7 billion of bonds last year to cover its shortfall during the pandemic. Assembly Republican Leader Jon Bramnick, a Republican, in April had called for Governor Phil Murphy, a Democrat, to use some of the federal aid to pay down the state’s debt.
“Patients will die,” an unidentified administrator declared, according to a recording of the March 21, 2020 meeting first reported by NJ Advance Media. “You understand that by asking us to take COVID patients, by demanding we take COVID patients, that patients will die in nursing homes that wouldn’t have otherwise died had we screened them out.”
About 8,000 COVID-19 deaths — roughly 40 percent of New Jersey’s 21,000 COVID-19 deaths — trace back to nursing homes and other long-term care facilities. On March 31, Murphy’s administration directed nursing homes to re-admit residents who had been discharged from hospitals while recovering from COVID-19.
While Persichilli’s guidance also directed nursing homes to house these residents in a separate wing, in order to avoid infecting other patients, many nursing home administrators warned that such separation would be incomplete and would fail to prevent the spread of the virus.
Associated Press requests last year for written and electronic communications among officials about the coronavirus were denied as “overbroad,” a kind of catch-all under the state’s Open Public Records Act that permits officials to shield certain information.
The administration also cited emails among the governor’s staff as privileged under the law because they were “inter-agency” and “consultative or deliberative,” additional carve-outs that prevent the release of documents under the law.
The administration also denied public records requests seeking payment vouchers for personal protective equipment it bought, saying it would be disruptive. Asked about it late last year, Murphy said he wasn’t sure why the information was withheld and soon afterward, the state divulged a list of expenditures showing about $220 million in expenses.
In addition to helping improve the long-term health of the pension system, Treasury officials are also projecting some significant budget savings can be generated by getting to full funding a year ahead of schedule.
Those savings, which will total an estimated $860 million over the next three decades, are based on the way the state’s unfunded liability accrues over the long term, the officials said.
Murphy’s administration should also be in a good position to manage the initial step up to full pension funding, thanks to a combination of factors, including money the state borrowed last year when it was expecting significant revenue losses would be triggered by the pandemic.
Gov. Phil Murphy said he will think about increasing the mandatory retirement age of New Jersey judges beyond the age of 70.
“You do have the reality. You’ve got a 78-year-old president who succeeded a 74-year-old president, so this is not a blip anymore,” Murphy said in response to an inquiry from the New Jersey Globe on Friday.
When New Jersey approved a new State Constitution in 1947 that forced judges to retire at 70, the average life expectancy of men in the United States – there was only one woman on the bench at the time, Libby Bernstein Sachar in Union County – was 62.
New Jersey Gov. Phil Murphy’s $44.8 billion budget proposal, unveiled last week, is a boon for labor and public sector pensioners, thousands of middle class residents and schools across the state.
New Jersey’s public worker pension plan has been underfunded for decades, but lawmakers and former Gov. Chris Christie began a ramped-up payment plan. Murphy wants to supercharge that plan and reach full payment a year early under the budget.
The payment would climb by $1.6 billion over the current fiscal year. The payment doesn’t translate to a boost in pensions for retirees. But it meets what actuaries have determined is the amount the state must pay to carry its share of the cost of pension payments to hundreds of thousands of retirees.
Gov. Phil Murphy?s call for New Jersey to make its first full pension contribution in 25 years is generating questions about retirement-system overhaul in one of the nation’s lowest-rated states, and how might the capital markets respond.
Murphy on Tuesday revealed the proposal to pay toward pensions roughly $6.4 billion, or about 14% of his $44.8 billion fiscal 2022 budget proposal to lawmakers. Overall spending would rise 10%. Democrat Murphy’s election-year budget would increase aid to schools and provide income-tax rebates to low- and middle-income families.
Making the full actuarially required contribution will need an additional $1.6 billion expense, according to Murphy. New Jersey was initially scheduled to earmark 90% of its full contribution this year under a ramp-up plan.
New Jersey Gov. Phil Murphy is expected to propose making a full payment to the state’s chronically underfunded pension system for the first time since 1996, a sign that the blow from the pandemic to all states’ finances isn’t as brutal as officials originally feared.
Mr. Murphy, a Democrat, will call for a $6.4 billion payment to the pension system in his budget address Tuesday, senior members of his administration said. The Murphy administration has been ramping up pension payments and originally intended on making a payment of $5.76 billion for the fiscal year that begins in July.