How Murphy Budget Allocates $2.4B In Federal COVID Funding


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This story was written and produced by NJ Spotlight. It is being republished under a special NJ News Commons content-sharing agreement related to COVID-19 coverage. To read more, visit

For six months the coronavirus pandemic has loomed large over New Jersey, taking an enormous toll on the state’s public health and economy, and affecting nearly every aspect of daily life.

But you won’t find it by name in Gov. Phil Murphy’s $32.4 billion budget proposal.

Instead, the nine-month state-spending plan — which lawmakers must approve by Oct. 1 — seeks to distribute $2.39 billion in new federal dollars to multiple departments and agencies to help local governments and schools, small businesses, health care providers and struggling families recover from the impacts of COVID-19, according to budget documents. Some additional state funds are also slated for similar pandemic-related responses, but determining the total depends on many factors, including how you define the relief.

According to the Treasury department, among other things the federal funds will be used to help daycare centers expand capacity, pay for laptops for students in online classes, provide workforce training for unemployed residents and support mental health and addiction treatment for children and adults. Other funds are earmarked for public services like NJ Transit, which was starved of rider revenue during the shutdown.

“We must have the unavoidable conversation about what it means to not only see our state through this emergency, but what we will look like when we emerge from it,” Murphy said in announcing the nine-month budget on Aug. 25. The state adopted an $8 billion interim spending plan in June, which expires this month.

However, the federal dollars from the Coronavirus Relief Fund, or CRF, are only a short-term fix, raising concern among some lawmakers now tasked with reviewing the spending. Members of Congress are debating additional relief packages but have yet to reach a firm deal.

Worrying about further funding
The unsustainable nature of the federal CRF money is also worrisome to some state-funded organizations, like behavioral health providers, a perennial presence at budget hearings where they are among the nonprofit organizations lobbying lawmakers for additional resources to maintain or expand services. Murphy’s budget proposal sets aside $75 million in CRF money to support mental health and addiction providers through December.

“It’s not just the traditional vulnerable population, but so many people who used to have (health) insurance are now unemployed. So we know there is a growing need,” said Debra Wentz, president and CEO of the New Jersey Association of Mental Health and Addiction Agencies, which is calling for full funding for all child and adult programs. “They’re going to return to our organizations and we want to be there to serve them.”

While official estimates vary, state revenues are projected to decline year-over-year as a result of the pandemic lockdown, forcing the Murphy administration to cut costs or identify new revenues. They chose a mix of both, trimming about $1 billion in potential spending and working with lawmakers to design new taxes, including several aimed at wealthy residents and top-earning businesses.

Legislative leaders joined Murphy Thursday to announce an agreement on an income-tax hike targeting millionaires that is designed to fund a rebate program for middle-class families. Murphy framed it as a response to the current economic recession, but checks are not likely to be mailed until next year, state officials said. It is not clear if the deal will impact Murphy’s plans for how federal CRF funds will be disbursed.

Murphy, a first term Democrat, dismissed calls for “draconian cuts” in the budget and continued to support the progressive programs he has long championed, like reproductive health and reducing racial and economic disparities. He said he also chose to protect costly social service programs, like Medicaid, while other states are reducing benefits to save money.

“You don’t grow and strengthen the middle class by pulling the rug out from under it — you can’t cut and slash your way to growth and opportunity,” Murphy said in his budget address.

“Despite everything, our values and our priorities remain intact.”

Spending increases for some government departments
Some branches of state government, like the Department of Children and Families and the Department of Human Services — which oversees the massive Medicaid program and community behavioral health services — would see increases under Murphy’s proposed budget ; DCF’s budget is up $43 million, or 3.6% over last year and DHS spending is slated to rise $346 million, or more than 5%, much of it from federal sources.

“We are faced with incredibly hard choices, but remain steadfastly committed to sustaining and maintaining the critical safety net for New Jersey residents while also making sure it is strong and robust enough to help additional fellow residents who are newly in need,” DHS commissioner Carole Johnson told the Assembly Budget Committee earlier this month. The department will also invest $155 million of state and federal dollars in temporary wage hikes for frontline workers at nursing homes, which were particularly hard-hit by the virus.

Small decrease for Department of Health
But the New Jersey Department of Military and Veterans’ Affairs, which runs three nursing homes for veterans — two of which have been battered by COVID-19 — would be allocated the same $100.2 million as it received in the 2020 fiscal year. And the proposed allotment for the Department of Health, whose commissioner Judy Persichilli has appeared beside the governor at his media briefings for six months, is down slightly, by $6.4 million, or 0.6% less than it spent last year.

In addition to regulating hospitals, nursing homes and other facilities, the DOH distributes tens of millions of dollars to support community health centers, disease surveillance systems and local health departments, which have led the charge on the state’s contact tracing to track and contain the coronavirus. Most programs, including for preventive and primary care for vulnerable groups, are slated to receive the same funding for the 2021 fiscal year as they ended up spending in this current year, according to the proposal Murphy unveiled in late August.

The DOH will also distribute another $613 million it will receive from the federal Centers for Disease Control and Prevention, over three years, according to department staff. These funds, including $5 million that was allocated in April, are being used to support county and local health departments battle COVID-19 and expand state programs for testing and tracing infectious disease outbreaks.

“This public health emergency has had an unprecedented impact on our state. The New York metro area emerged as the first hotspot in the United States. Every corner of our state was affected,” Persichilli testified before the Assembly budget panel last week; as of Friday, COVID-19 had infected close to 199,000 New Jerseyans, including nearly 14,300 whose deaths have been definitively linked to the virus. “Life as we know it changed and we are now all living the new normal,” she said.

By the numbers
Under Murphy’s budget proposal, the $2.39 billion in federal CRF funding would benefit the following recovery initiatives, among others, according to a Treasury report:

  • $698 million for new state expenses, including salaries and health benefits, NJ Transit, vote-by-mail programs and information technology;
  • $300 million for universities through the Office of the Secretary of Higher Education;
  • $300 million to expand COVID-19 testing and isolation options through the Department of Health and the state Office of Emergency Management;
  • $250 million to expand child care capacity through the departments of Human Services and of Children and Families;
  • $250 million for local governments, funneled through various departments, including $5 million for emergency dispatch services;
  • $150 million for the Department of Education to help local districts reopen schools and reduce the “digital divide” among pupils;
  • $122 million, through various departments, to help residents with emergency rental payments, support small landlords, prevent homelessness and reduce hunger;
  • $106 million to support small businesses and unemployed workers, various departments;
  • $75 million to benefit behavioral health programs and pay for personal protective equipment for their staff;
  • $10 million to support long-term care oversight within the health department.
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