Lawsuit Against Murphy Budget & $9.9 Billion Debt Dismissed. “Not Ripe”.

Mercer County Superior Court Judge Mary Jacobson granted the State’s motion to dismiss our lawsuit this morning.  She ruled that it was “not ripe”.  (Photo by

On June 4, all 52 Democrats in the 80 members Assembly voted for A-4175, a law proposed by Governor Murphy to borrow an unspecified amount of money for an unspecified period of time.  Murphy had made numerous public statements saying the State needed anywhere from $10 billion to $20 billion to avoid “mass layoffs”.  He said he would use the “emergency” or “act of God” loophole to avoid the need for voter approval as required by our State Constitution. together with Michael Smith, one of our members, filed a a lawsuit two weeks later to block any borrowing without voter approval. We expected the bill to be quickly adopted by the State Senate and the Governor.  However, State Senate President Steve Sweeney delayed Senate approval for more than a month, while he demanded changes to the loan package.

A new bill agreed to by Sweeney (S2697) was introduced last Tuesday.  It was approved by the State Senate Budget and Appropriations this morning, while Judge Jacobson was ruling on our case a few blocks away.

This new Senate Bill must now be reviewed by the Assembly and approved by Governor Murphy before becoming law.  However, Governor Murphy and Senate President Sweeney already publicly stated their agreement to it.  They said the bill is “fast-tracked” and should become law quickly.

However, Judge Jacobson ruled that our cases was “not ripe” and dismissed it “without prejudice”  She said she expected us and others to file a new lawsuit to block  the new Senate Bill when it is finally passed by the Senate and Assembly and approved by the Governor.

The 20 page Senate Bill 2697 includes the following:  (Click here for full text.)

  1. The State would borrow up to $2.7 billion “to address the State’s financial problems that have arisen as a consequence of the COVID-19 Pandemic for the “mini-budget” of July, August, and September of 2020.  This money would be borrowed through Wall Street bonds, or the Federal Reserve.
  1. The State would borrow up to $7.2 billion for remaining nine month budget from October 1, 2020 through June 30, 2021.
  1. The borrowed money, together with interest and “transaction fees” will be paid back over the next 35 years. If the State doesn’t collect enough money from existing state taxes during any year, a new statewide tax on all real estate will automatically be added to all school, county, and local property tax bills.
  1. The law will NOT be submitted for voter approval as required by the New Jersey State Constitution.

I  was disappointed with two parts of Judge Jacobson’s decision.

New Jersey’s Constitution requires the State to have a balanced budget every year.   This year,  the Governor and Legislature broke the budget year was broken into two segments.  One three month segment runs from July 1 through September 30.  The other nine month segment runs from October 1 to June 30.

Our lawsuit alleged that the July, August, and September, 2020 state “mini” budget was not balanced.  We based it on public statements made by Governor Murphy, projections released by his State Treasurer on May 22, and his insistence on $9 billion in federal grants or loans without voter approval.  We hoped the court would allow a two week postponement of the dismissal and let us amend our complaint when the new law was adopted.  This would allow us to get “discovery” through the courts.  We wanted state officials to produce documents showing the true state of State finances.

For example, years ago, State Government had a line of credit with Goldman Sachs years ago.  We want to know if NJ state government still has a line of credit, and if so, how much it has drawn.

Judge Jacobson ruled that our allegations were too “speculative” to justify forcing the state to produce those documents.  Governor Murphy and his State Treasurer officials certified that there was sufficient revenue in the budget through September 30.  Judge Jacobson said we had failed to present evidence that their certifications were wrong.   But how could we present evidence without access to the documents!

Now, we must use the slower and more cumbersome method of trying to get those documents through the Open Public Records Act (OPRA) process.

Also, I thought the budget deficit for this three month period is self-evident.   Why would Governor Murphy and Legislative be in such a hurry to borrow $2.9 billion by September if they had a balanced budget!

This massive borrowing plan has nothing to do with fighting the pandemic”.  It is about depriving most private business owners and employees of income for a year, while forcing them to pau state government employees in full with 2% per year raises—even when they are not working”.

If we are going to do another year of this, we should follow our State Constitution and let the voters decide.  If not, New Jersey taxpayers who are getting no benefit from this will be paying the bill for the next 35 years—if they decide to stay in New Jersey.

Seth Grossman

(609) 927-7333

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