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April 23, 2020

CARES Act restrictions prevent New Jersey from utilizing full benefits, Gov. Murphy claims

Financial hardships threaten to leave firefighters, police officers and teachers out of work, he says

Government Coronavirus
New Jersey CARES Act Source/Image licensed from Ingram Image

New guidance on the CARES Act, issued by the U.S. Treasury Department, will make it difficult for New Jersey to utilize much of the $1.8 billion it is slated to receive, Gov. Phil Murphy claims.

Much of the $1.8 billion that New Jersey is slated to receive from the coronavirus stimulus bill could be deemed unusable and need to be returned to the federal government, Gov. Phil Murphy said Thursday.

The U.S. Treasury Department issued new guidance Wednesday regarding the $2.2 trillion CARES Act. States must use the money to cover necessary expenses incurred by the COVID-19 crisis. Those expenses also must not have been accounted for in the most recent budget and must have occurred between March 1 and December 30.

But the funds cannot be used to cover state revenue shortfalls due to the coronavirus pandemic, Murphy insisted.

Murphy said that he previously had been assured the funding came with flexibility. But the new guidelines likely will result in much of the funding heading back to Washington, he said. 

“Unlike the federal government, which can run trillion-dollar deficits every year, New Jersey can’t,” Murphy said. “I, just like New Jersey’s families, have to budget based on certain income and certain expenses.”

The Treasury Department did not immediately return a request for comment.  

According to the guidelines, eligible expenses include various medical and public health costs, some payroll expenses and costs incurred by providing economic support. The funding cannot be used to cover Medicaid expenses, damages covered by insurance, costs that will be reimbursed by federal programs, workforce bonuses, severance pay, legal settlements and some payroll costs.

Echoing his message from Wednesday, Murphy reiterated that difficult financial decisions will be necessary to keep New Jersey from declaring bankruptcy unless Congress provides the state with direct cash assistance. That could result in teachers, police officers, firefighters and paramedics losing their jobs, Murphy said.

"Sadly, the message from Washington to our first responders and to our educators is clear," Murphy said. "As you work tirelessly to stop this pandemic, to keep people safe, our national leadership thinks you are not essential, that you should fear for your jobs."

Though the New Jersey Department of the Treasury reported last Wednesday that the state’s revenue rose by 3.6% year-over-year in March, it warned that the economic impact of the coronavirus pandemic will begin to be felt in April.

Congressional lawmakers are working on a nearly $500 billion relief package to benefit small businesses and hospitals adversely impacted by the public health crisis. The bill, which also will provide funding to expand COVID-19 testing, does not consist of any direct cash assistance to state governments, Murphy said. 

“We will not relent until the federal government provides the support we need to protect the services that millions of residents rely upon,” Murphy said.

State officials reported an additional 4,287 confirmed coronavirus cases, bringing New Jersey's total to 99,989 as of Thursday afternoon. There have been 5,368 deaths due to COVID-19.

The vast majority of positive coronavirus cases have been in North Jersey, but there have been 6,919 cases and 267 deaths in South Jersey.

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