Keeping the Lights On
THE STATE WE’RE IN: The economic impact of the depleted New Jersey state budget on Rutgers
How bad is it? When it comes to the state budget, it’s probably never been worse. Late in March, the director of the Office of Management and Budget announced that the state would be “freezing” nearly a billion dollars in payments for state appropriations for the last four months of the fiscal year. For Rutgers, after successfully appealing for some relief to the freeze, that meant an immediate halt in monthly payments totaling more than $50 million.
A month earlier, things were never better. The state boasted a billion-dollar surplus, the rainy-day fund held more than $400 million, and tax revenues, only three-quarters of the way through the fiscal year, were running a remarkable $1.4 billion ahead of projections.
In the blink of an eye, there was a swing of more than $2.8 billion. Tax revenues, Governor Phil Murphy said, “have fallen off the table.” They haven’t yet hit the floor, and more than two months since the freeze, we don’t know how far they will drop.
The state sales tax typically generates $2.5 billion in April, May, and June. Those revenues have vaporized. Few taxable goods are being sold, retail outlets are closed, and taxable meals and entertainment are few and far between. Income tax? In the four weeks from mid-March to mid-April, more than 700,000 New Jerseyans filed for unemployment. Filings in that single month were almost double the total number of unemployment claims during all of 2019. There won’t be much in the way of income to tax for a while.
We are in uncharted waters. The state is broke, and there will be pain for everyone: municipalities, counties, even the most worthy programs. Rutgers’ state appropriation, which typically accounts for 20 percent of our budget, will undoubtedly be cut.
These are difficult times, but we will figure out a way. We’ll do things differently, we’ll be more efficient, and we’ll just have to stop doing some things altogether. But, we will keep the lights on; we’ll still meet our mission of teaching, research, and service; and we’ll still be one of the finest institutions of higher education in America.