State Budget: Fed on Hook for Sandy Recovery

New Jersey’s recovery following Hurricane Sandy will come, officials and legislators at Tuesday’s budget introduction at the Statehouse in Trenton said, but just don’t expect the State to pay for it.

Among Gov. Chris Christie’s proposed $32.9 billion budget, only about $40 million has been set aside for Sandy-related recovery, all of it coming in the form of supplemental aid. Its intended use will only be as a stopgap during the process of the state’s securing aid for various recovery efforts.

The negligible sum will have little impact on the state’s budget, according to New Jersey Treasurer Andrew Sidamon-Eristoff. Instead, the state will lean on the federal government to cover the costs of New Jersey’s recovery, which is expected to cost tens of billions of dollars.

In January, the U.S. House of Representatives approved approximately $50.7 billion in Hurricane Sandy recovery aid. That money is expected to reach New Jersey residents in the form of Community Development Block Grants and other funding sources as soon as April.

There are some concerns that sequestration could impact the federal recovery aid intended for New Jersey. Should the White House and Congress fail to reach a deal on spending cuts, various departments in New Jersey could be adversely impacted. Sandy relief would also be cut to some degree, though Sidamon-Eristoff said he was unaware of any specifics.

Currently, there are no plans to amend the state’s budget to account for the possibility of lost Sandy aid.

Assemblyman Declan O’Scanlon, R-13, who represents some of the areas hardest hit by Sandy said the state’s contribution in terms of supplemental aid is irrelevant. The governor, he said, has rightly laid the disaster recovery bill at the feet of the federal government, charging them with the cost of restoring the shore.

No one, he said, should infer anything from the supplemental aid total. It exists only as a last resort stopgap in fed-funded rebuilding effort.

Sidamon-Eristoff said the state’s municipalities and districts should look to the federal government first and foremost when it comes to seeking aid or applying for recovery loans. The State’s Department of Community Affairs could conceivably distribute the supplemental aid to towns in need, though he said it would only be as a second, or tertiary, option.

Overall, Sidamon Eristoff said, Sandy wouldn’t especially impact the State’s budget. New Jersey would see a revenue shortfall of about $407 from its previous estimate, though revenue growth has continued following Sandy.

In terms of revenue growth – estimated to grow by 4.9 percent in fiscal year 2014 – O’Scanlon said it’s on the rise following Sandy, trending in the right direction and signaling positive momentum during what could have been a sluggish economic period. Sidamon-Eristoff said following a couple of down months the state has seen revenue growth after Sandy. He said he believes the overall impact of Sandy would be modest and that the recovery and reconstruction effort could actually lead to a positive bump in revenue overall.

“I’m not sure there will be a significant material impact,” he said of Sandy’s role in the State’s revenue.  Sidamon-Eristoff said he even anticipates a rebound occurring in upcoming fiscal year that will offset any revenue hiccups suffered during Sandy.