Murphy made improper transfer of $10M in federal COVID relief money, budget analysts say

Gov. Phil Murphy’s administration in April made what appears to be an improper transfer of $10 million in federal coronavirus relief money, according to an email from New Jersey’s nonpartisan Office of Legislative Services.

The New Jersey Department of Community Affairs, headed by Lt. Gov. Sheila Oliver, made two transfers of $10 million each out of the state’s coronavirus recovery fund to the Excluded New Jerseyans Fund, according to the email, obtained by NJ Advance Media.

The OLS sent the email Wednesday to inform state lawmakers that one of those transfers “appears to violate the rules established” in the state budget for the current fiscal year.

The Garden State received $6.24 billion through the American Rescue Plan signed by President Joe Biden in March 2021. Most of that money remains unspent, and the Murphy administration has yet to release a detailed plan for more than $3 billion that is still unallocated.

Murphy and lawmakers agreed last year that the Legislature’s bipartisan Joint Budget Oversight Committee would have to approve the use of those funds. It was included in language in the bill for the current state budget, which expires June 30.

The appropriations act set aside $200 million in federal funds that the governor could directly allocate to pandemic-related programs without legislative approval. But language in the bill states that those allocations are “not to exceed $10 million for each such eligible program…”

New Jersey’s Department of Community Affairs made a $10 million transfer on April 18 that budget analysts said “was effected in accordance with the FY 2022 budget language.”

“But the legal authority for the second $10 million transfer effected on April 29 is unclear,” OLS said in its email to lawmakers.

The Murphy administration, in an interview Thursday with NJ Advance Media, said it interprets the language differently. Administration officials say the appropriations act allows for multiple $10M transfers to the same program.

“Each allocation from the Governor’s $200 million set aside is made in allocations of $10 million or less, in accordance with the Administration’s interpretation of budget language,” Murphy spokeswoman Alyana Alfaro-Post told NJ Advance Media. “The Excluded New Jerseyans Fund has been expanded through a series of programmatic phases, each of which has been announced publicly.”

Officials from OLS asked the Murphy administration’s Office of Management and Budget for an explanation on Monday, May 9 and asked again on two other occasions since then, according to the email sent to lawmakers Wednesday.

Lynn Azarchi, acting director of the management and budget office, sent a brief response to OLS on May 24, according to the Murphy administration. But that response did not provide an explanation for what authority was used to justify the second $10 million transfer.

“To this day, no explanation has been provided and the Executive seems to be moving ahead with its plans to disburse the $20 million, notwithstanding my raising of legal concerns,” the OLS said in its email.

Excluded New Jerseyans Fund

The $10 million transfers are being used to replenish and bolster the state’s Excluded New Jerseyans Fund, which was created last year with an initial $40 million to provide assistance for undocumented immigrants and other workers excluded from economic aid during the pandemic.

Murphy announced the fund in May 2021 after a nearly month-long hunger strike by undocumented immigrants who were desperately seeking financial relief after being excluded from most forms of direct economic aid, including unemployment benefits and stimulus checks. But enrollment did not begin until the fall and publicity was sparse.

Immigrant advocacy organizations and lawmakers, including state Sen. Teresa Ruiz., D-Essex, urged the administration to dedicate a larger share of the pandemic funding to reach more of the 460,000 undocumented immigrants and their families who did not qualify for other forms of assistance.

Facing mounting criticism, the state re-upped the program with another $10 million in federal aid, and doubled the size of the grants — from $1,000 to $2,000 for individuals and $4,000 for families, according to the state announcement.

A state government website explaining the fund says that it provides one-time, direct cash benefits to eligible households, including “residents re-entering from the justice system, and any other individuals otherwise excluded.”

The undocumented community includes many who were essential workers — janitors, kitchen staff and food delivery services — and people who lost their jobs with no recourse, said Make The Road New Jersey, an organization advocating for immigrant, working-class and Latinx communities.

And undocumented workers contributed more than $600 million in state and local taxes, and more than $1 billion to the state’s unemployment fund in the last decade, according to a Make the Road study. The undocumented workforce helped keep the state’s service economy going after the coronavirus struck two years ago, the study said.

About 35,000 people applied for a share of the fund, according to Make the Road.

Federal Funds Oversight

When New Jersey received its $6.24 billion last May, Murphy charged the state’s Division of Disaster Recovery and Mitigation with administering the fund. The division is part of the Department of Community Affairs, headed by Lt. Gov. Sheila Oliver.

State lawmakers fought to have a say in the use of those funds through the bipartisan joint budget committee, and Murphy agreed last year to include language in the current state budget.

However, that language is absent from Murphy’s new $48.9 billion spending proposal for the fiscal year that begins July 1, effectively removing the Legislature’s oversight. The move caught state lawmakers by surprise and prompted concerns from both Democrats and Republicans during recent departmental budget hearings.

Several legislative leaders, including state Senate President Nicholas Scutari, D-Union, said the issue is non-negotiable and legislative oversight must be restored before a final budget is passed.

Democratic state lawmakers declined to comment Thursday on Murphy’s transfer of $20 million in April.

Republican state lawmakers issued statements Wednesday saying it’s clear the transfers were in violation of state law, and they highlighted a lack of explanation from the administration’s Office of Management and Budget.

“This obviously isn’t the first time that Murphy and his team have decided check and balances aren’t important,” said Assemblyman Hal Wirths, R-Sussex, the GOP budget officer in the state Assembly. “If you give big government advocates an inch, I can guarantee they will take a mile and take their time to justify it.”

In a statement released Wednesday, state Sen. Michael Testa, R-Cumberland, called on New Jersey Treasurer Elizabeth Muoio to explain the transfers.

“The Murphy administration has demonstrated that they can’t be trusted to follow the law on their own,” added Testa. “This is exactly why Senate Republicans have called for strengthening legislative oversight of Murphy administration spending in our comprehensive budget plan.”

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Derek Hall may be reached at dhall@njadvancemedia.com. Follow him on Twitter @dereknhall.

Susan K. Livio may be reached at slivio@njadvancemedia.com. Follow her on Twitter @SusanKLivio.