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Law360 (May 5, 2020, 7:28 PM EDT ) New Jersey Gov. Phil Murphy has set aside his goal for a $1.28 billion surplus in fiscal year 2020 as the state faces steep tax revenue drops because of the novel coronavirus pandemic.
Murphy signed Executive Order No. 137 on Monday, rescinding a March 2019 executive order directing the state Department of Treasury to achieve a $1.28 billion surplus by the end of the 2020 fiscal year.
That order required the state treasurer to monitor a number of areas — including monthly revenue collections, legislative activity and other developments directly affecting fund balances — to ensure that the state's balances in the estimated closing undesignated fund and rainy day fund total $1.276 billion.
In March, the state treasurer issued guidance on the severe impacts the pandemic is expected to have on the state's economy and financial condition, including declining gross income taxes, corporate business taxes, sales taxes, motor fuels taxes, casino-related taxes and lottery sales, according to a news release Monday from the governor's office. The state also expects negative impacts on liquidity associated with the state's decision to extend the state tax filing deadlines from April 15 to July 15.
"In the absence of significant federal assistance, we are on the brink of having to make very tough fiscal decisions, and a $1.28 billion surplus for this fiscal year is no longer realistic," Murphy said in the news release.
The order also follows the state's decision to extend the end of fiscal year 2020 from June 30 to Sept. 30, a step influenced by the federal government's decision to defer its own tax filing deadline from April 15 to July 15.
In addition to rescinding the earlier executive order, Executive Order No. 137 authorizes the New Jersey treasurer and the director of the Division of Budget and Accounting to continue to update and expand their ongoing actions and activities in response to the pandemic.
State Treasurer Elizabeth Maher Muoio, in Monday's news release, pointed to a lack of federal funding as a contributing factor in the state's budget challenges amid the pandemic.
"Building our reserves to responsible new heights was one of our paramount fiscal goals," Muoio said. "Absent additional federal funding and a substantive borrowing facility, our foremost priority now is ensuring sufficient cash flow to meet this health crisis head on while also meeting our basic obligations."
The order took effect immediately.
Representatives of Muoio and the state Treasury Department did not immediately respond to requests for comment Tuesday.
--Editing by John Oudens.
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