TRENTON — Counties and municipalities could borrow up to 30% of their budget and repay it over 10 years without needing permission from local voters or the state, under a bill now on Gov. Phil Murphy’s desk after the Senate approved it Thursday.

Local governments say they face “revenue starvation” as a result of the coronavirus pandemic, as well as increased costs associated with their response, and worry about big increases in property tax rates due to those deficits and an anticipated deluge of tax assessment appeals from commercial properties.

“This legislation is a carefully crafted solution geared specifically to the circumstances that we are in now. Local governments, like the state government, have recorded record decline in revenues,” said Mike Cerra, executive director of the New Jersey League of Municipalities. “It is without precedent.”

Cerra said there have been losses of permitting fees, licensing fees, parking revenues, court fines, hotel taxes and more. Most of those cannot be recouped, he said.

Michael Hanley, principal at NW Financial Group, said there is no economic model that can anticipate how much time it will take for the economy to “go back to normal or adjust to a new normal.”

“This bill is crucial to municipalities, particularly municipalities that rely on non-property tax revenue connected to hospitality, to parking, such as your Jersey City, Newark, the Shore municipalities,” Hanley said. “They’re facing a revenue crisis, and being able to spread the impact of those revenues over time is very important because the alternative to that is large tax increases or draconian cuts in services.”

“It’s an excellent time to borrow,” Hanley said, “and an excellent time to spread those costs to a period of time when taxpayers are not under the pressure they’re under today.”

Sen. Declan O’Scanlon, R-Monmouth, withdrew as a co-sponsor of the bill, citing changes to the plan made in the Assembly that raised the borrowing cap from 20% of spending to 30% and deleted language that required local entities to “thoroughly investigate” funding from federal, state and other sources.

“The Assembly screwed it up,” O’Scanlon said. “They increased the time over which a municipality could repay by 20%, the amount as a percentage of budget that could be borrowed, they increased by 50%. There’s virtually zero oversight.”

The vote in the Senate was 26-14. All 25 Democrats voted for it, as well as one Republican: Sen. Christopher "Kip" Bateman, R-Somerset. All of the other Republicans voted against it.

The bill had been passed by the Assembly in mid-May, then stalled because Senate President Steve Sweeney, D-Gloucester, said he didn’t support it.

A provision had at one point been included in legislation allowing the state to borrow $9.9 billion for its operating budget that would have also allowed the state to borrow on behalf of local governments from the Federal Reserve. That language was removed before the bill was enacted into law.

Michael Symons is State House bureau chief for New Jersey 101.5. Contact him at michael.symons@townsquaremedia.com.

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