FY2025 Budget: Gov. Murphy Resorts to One-Time Fixes To Pay for His Unsustainable Spending

Gov. Murphy spends a lot of time talking about how fiscally responsible he is, but as always with Murphy, you have to look through the words to the actual numbers.  An excellent example of that is Murphy’s FY2025 budget: it is not a fiscally responsible budget.  Now NJ Spotlight News reports that he is resorting to one-time fixes to pay for his unsustainable spending.  

We’ve already noted that Murphy’s FY2025 budget increases spending by 3% to a record $55.9 billion, which is an astounding $21.2 billion — or 61% — higher than Gov. Christie’s last budget.  As the Sweeney Center determined, this is an unsustainable spending trajectory that portends serious deficits down the road.  This is not fiscally responsible.

But Murphy’s FY2025 budget is also in structural deficit.  As long as Murphy benefited from COVID-related revenue windfalls, he was able to spend freely and pay for it.  But those windfalls are going away, so Murphy’s unrestrained spending results in a nearly $2 billion structural deficit.  This is not fiscally responsible.

To nominally balance his budget, Murphy is resorting to one-time fixes to plug the deficit.  First, we heard that he wants to dip into the state’s Rainy Day fund (which is supposed to be for budget emergencies), dropping it from $8.2 billion to $6.1 billion, or by -26%.  The Sweeney Center projects that the Rainy Day Fund will be totally depleted in a few years.  This is not fiscally responsible.

Now we learn from NJ Spotlight News that Murphy plans another one-time fix: using $600 million from a debt defeasance fund (which is meant to pay down debt) to help plug the deficit.  Murphy has touted his debt defeasance fund as paying down $3.7 billion of debt and saving $1.4 billion of interest for taxpayers.  But recall that Murphy borrowed $3.7 billion in very expensive emergency COVID bonds, whose total interest payments amount to $1.3 billion.  So looking through Murphy’s words, we find he basically borrowed money to pay down debt and saved nothing for NJ taxpayers.  Now he wants to use $600 million from the debt defeasance fund to pay for his budget deficit.  This is not fiscally responsible.

The bottom line is that Murphy’s FY2025 budget is not fiscally responsible: He resorts to one-time expedients to pay for his unsustainable spending.  This suits his government union pals very well — who always and everywhere want more government spending — but burdens NJ with some serious fiscal problems for the future.