TRENTON, N.J. – Assemblyman Jay Webber said there is no getting around the state constitution that prohibits borrowing money to balance the state budget, even in times of war or an emergency.
“Borrowed funds cannot be used as income to balance the state budget,” said Webber (R-Morris). “The state Supreme Court in Lance v. McGreevey has already looked at this and given all the guidance we need.”
The court ruled in the case that “borrowed monies, which themselves are a form of expenditure when repaid, are not income pertaining to general costs without violating the Appropriations Clause,” noting that the state constitution requires a balanced budget.
Webber represented the plaintiffs in the 2004 lawsuit against then-Gov. Jim McGreevey to halt the State from borrowing money to balance its books.
The state Supreme Court, in a landmark 4-1 decision, said McGreevey and the Democratic-controlled Legislature enacted a budget that was not legally balanced because it relied on almost $2 billion in borrowed funds, and prohibited the state from doing so again.
In 2005, after Acting Gov. Dick Codey tried a similar maneuver, Webber again represented plaintiffs who sued to enjoin the government’s unconstitutional scheme, and won.
“The reference to the ‘act of God’ clause in the constitution, which Governor Murphy’s legal team seems to be promoting, has no effect on the holding in Lance,” said Webber. “The ‘act of God’ clause applies to the provision requiring voter approval of debt, not to the constitution’s guarantee that our expenditures will not exceed our revenues, which do not include monies from bond issuances.”