EconomicTop News

Cash-strapped New Jersey to borrow up to $9.9 billion under deal

2 Mins read
imageEconomy10 hours ago (Jul 10, 2020 05:00PM ET)

(C) Reuters. FILE PHOTO: New Jersey Governor Phil Murphy arrives to speak about electronic smoking products during a news conference in Trenton, New Jersey

By Karen Pierog

(Reuters) – New Jersey, one of the states hardest hit by the coronavirus outbreak, would borrow up to $9.9 billion from sources that could include the U.S. Federal Reserve to deal with massive revenue losses from the economic shutdown, under an agreement announced on Friday between the governor and legislative leaders.

At a media briefing, Democratic Governor Phil Murphy said the state “is out of money” and that it needs the borrowing as well as an influx of federal dollars due to a budget shortfall through 2021 that he cautioned could reach $20 billion.

“Everybody recognizes the need for the borrowing, as painful as it is,” he said. “We know we don’t have a choice even with federal cash.”

The Fed’s municipal liquidity facility is an option for a significant portion of the borrowing, according to Murphy’s office. Illinois became the first state to tap the program with a $1.2 billion, one-year loan last month.

New Jersey Senate President Steve Sweeney, a Democrat, said the borrowing would address the financial crisis caused by the virus and would be overseen by a new legislative commission. A borrowing bill is expected to be taken up by the Senate next week and then move to the Assembly for a vote.

States, including New Jersey, have been pushing the U.S. Congress for unrestricted funding they could use to plug big budget holes caused by plummeting tax revenue.

U.S. House Speaker Nancy Pelosi on Thursday called for $1 trillion for state and local governments

To deal with its crisis, New Jersey extended the end date for its fiscal 2020 budget by three months to Sept. 30, 2020. Fitch Ratings in April downgraded New Jersey’s credit rating one notch to A-minus with a negative outlook, citing “significantly weakened finances.”

New Jersey has had 176,575 cases of the coronavirus, according to a Reuters tally, the fifth-highest of any U.S. state. https://graphics.reuters.com/HEALTH-CORONAVIRUS-USA/0100B5K8423/index.html

Cash-strapped New Jersey to borrow up to $9.9 billion under deal

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.