Governor Phil Murphy announces Stage 2 of New Jersey’s reopening. Two authorities and the Federal government announce billions in transportation infrastructure investment. Congress acts on legislation to revise the federal Paycheck Protection Program. And Murphy’s Restart & Recovery Advisory Council kicks off its work. We hope this edition of TrueNorth finds you safe and healthy during this truly unprecedented time in our nation and world.
New Jersey announces reopening Stage 2
During his daily COVID-19 briefing on Monday afternoon Governor Phil Murphy announced that New Jersey would move to Stage 2 of reopening on Monday June 15, 2020.
Restaurants will be allowed to reopen for outdoor dining. Non-essential retail will be allowed to reopen with restrictions. Salons and barber shops will also be allowed to reopen. According to the Governor, gyms and health clubs will be allowed to reopen soon, although he gave no timetable. The Murphy Administration is developing guidance to send to businesses later this week.
The Murphy Administration has faced growing calls to expedite the State’s reopening. The Governor has already eased some restrictions as the number of hospitalizations and new cases have declined. As Stage 1 of the multi-stage reopening plan announced two weeks ago, the Governor has allowed county parks, golf courses, and non-essential construction to re-open and resume. He also allowed beaches to re-open in time for Memorial Day weekend.
The Murphy Administration has stressed that it is working to balance public health with New Jersey’s economic recovery. Over 1.1 million New Jersey’s have filed for unemployment since mid-March, skyrocketing the State’s unemployment rate to over 15%. Murphy has announced plans to cut $1.3 billion in State spending to offset a projected $10 billion drop in tax revenues through June 2021.
Historic levels of infrastructure investment
Capital programs were approved by the New Jersey Turnpike Authority and South Jersey Transportation Authority. The Federal government awarded a grant for Portal Bridge.
NJTA & SJTA Capital Programs
On Wednesday the New Jersey Turnpike Authority approved a $24 billion, 10-year capital program that will fund essential road and bridge projects on the New Jersey Turnpike and Garden State Parkway. Over $300 million will be contributed to NJ TRANSIT for important rail and bus investments.
Several hours later, the South Jersey Transportation Authority took action to approve its own $500 million capital program to finance improvements on the Atlantic City Expressway, AC International Airport, and the implementation of All Electronic Tolling on its roads.
The capital programs are financed through toll increases. Governor Murphy expressed his support for the action by the two authorities.
Infrastructure investment will be a necessary component of New Jersey’s economic recovery from the COVID-19 pandemic. The combined programs are expected to generate over 18,000 jobs annually, create $38 billion in economic activity, and increase State revenues from $19 billion in 2020 to $24 billion in 2030. The toll increases will be effective in September.
The American Council of Engineering Companies of New Jersey (ACECNJ) played an important advocacy role in support of the capital investment programs. ACECNJ member firms will work closely with professional staff from the two authorities to expedite project delivery and make sure that toll revenues are invested wisely on the repair and rehabilitation of critical transportation assets.
The Federal government on Tuesday awarded New Jersey $91.5 million toward replacement of the Portal North Bridge. The 110-year old bridge sits in the middle of the busy Northeast Corridor just west of the Hudson River tunnel. Roughly 450 Amtrak and NJ TRANSIT trains cross the bridge each day and many train riders have endured painful delays when the bridge – which opens to allow marine traffic to pass – gets stuck in the open position. Portal Bridge is part of the larger Gateway Program that includes replacement of the Hudson River tunnel and is intended to completely replace the 100-year old rail connection between New Jersey and Manhattan.
This grant award is a huge victory for the New Jersey region and also the nation’s economy. The regional economy that includes New York City and northern New Jersey contributes more than $1.3 trillion in output, close to 9% of the national economy. This output depends largely on workers being able to get to jobs in Manhattan, making good transit connections essential.
Murphy Restart & Recovery Advisory Council
Governor Murphy has established a Restart and Recovery Advisory Council to advise State leadership on economic issues impacted by the COVID-19 pandemic. The Council will focus on the short-term restart of New Jersey’s economy as well as the long-term economic recovery. Nine subcommittees, each focused on different aspects of the economy, will present recommendations and findings to the Murphy Administration for further action. The subcommittees have already begun meeting and will continue their work through the Summer. NorthStar Strategies is pleased to have numerous clients appointed to the Council. We thank them for their service and likewise commend the Governor’s leadership and efforts to bring New Jersey back.
On Thursday, the US House of Representatives approved the Paycheck Protection Program (PPP) Flexibility Act (HR 7010) by a vote of 417-1. All Members of the New Jersey Congressional delegation voted in support. Key provisions of HR 7010 would:
- Extend the PPP loan forgiveness period to include costs incurred over 24 weeks after a loan is issued or through Dec. 31 (whichever comes first); businesses that received a loan before the measure is enacted could keep the current eight-week period.
- Extend to Dec. 31 from June 30 a period in which loans can be forgiven if businesses restore staffing or salary levels that were previously reduced. The provision would apply to worker and wage reductions made from Feb. 15 through 30 days after enactment of the CARES Act, which was signed into law on March 27.
- Maintain forgiveness amounts for companies that document their inability to rehire workers employed as of Feb. 15, and their inability to find similarly qualified workers by the end of the year. Under the modified bill, companies would be covered separately if they show that they couldn’t resume business levels from before Feb. 15 because they were following federal requirements for sanitization or social distancing.
- Extend the deadline to apply for a PPP loan to Dec. 31 from June 30.
- Require at least 60% of forgiven loan amounts to come from payroll expenses.
- Repeal a provision from the CARES Act that barred companies with forgiven PPP loans from deferring their payroll tax payments.
- Allow borrowers to defer principal and interest payments on PPP loans until the SBA compensates lenders for any forgiven amounts, instead of the current six-month deferral period. Borrowers that don’t apply for forgiveness would be given at least 10 months after the program expires to start making payments.
- Establish a minimum loan maturity period of five years following an application for loan forgiveness, instead of the current two-year deadline set by the SBA. That provision would apply to PPP loans issued after the measure is enacted, though borrowers and lenders could agree to extend current loans.
Prospects for action in the Senate appear good considering the overwhelming support for the House bill. Senate Leader Mitch McConnell is trying to get unanimous consent to pass the House bill although it is unclear at the time of this posting if all Senators will agree. The Senate may also separately take up some clarifying technical language which would then have to go back to the House.