Murphy Drops $33M Budget Diversion After Getting Flamed By Firefighters

Governor finds plan to siphon cash from dedicated fund that assists needy first responders and their families too hot to handle

After getting the state’s firefighting community hot under the collar, Gov. Phil Murphy is no longer planning to divert $33 million from a dedicated fund that helps these needy first responders and their families. But longstanding rules about how the money can be spent may be overhauled as lawmakers take a closer look at the issue.

In fact, even as Murphy, a Democrat, backed away from his budget diversion in the face of heavy criticism early this week, he said he was willing to work with lawmakers who may want to retool the relief fund, which is more than 130 years old and draws revenue from an even older tax that’s levied on certain fire-insurance policies.

One of the ideas being discussed would broaden the ways the relief money can be used. The current rules are considered too restrictive, leaving millions of unspent dollars in the fund. Changing oversight and audit requirements could do more to protect against wasteful spending.

But one lesson the governor and lawmakers have likely learned from Murphy’s public-relations misstep is that they will have to work closely with the firefighting community to avoid a repeat of the backlash generated in response to Murphy’s recent budget proposal.

Diverting funds on the QT

The controversy over the relief funds controlled by the New Jersey State Firemen’s Association and dozens of local relief organizations arose earlier this week after NJ Advance Media reported on the planned diversion, which Murphy quietly included in his overall $38.6 billion budget plan for fiscal year 2020. The diversion totaling $33 million was also detected and questioned by Sen. Troy Singleton (D-Burlington) during a budget committee hearing that was held last week in Trenton.

Murphy initially defended the proposed diversion by pointing to nearly $250 million in accumulated fund reserves that were detailed in a report issued late last year by the Office of the State Comptroller. The same report found that local relief associations collectively “spent more on administrative and convention expenses than they spent on relief payments” over the four-year period studied by the OSC.

But lawmakers from both parties loudly questioned the diversion, and firefighters turned out in force during a town hall meeting Murphy held in Ewing on Monday to question his actions. By Tuesday, Murphy announced he was shelving the planned transfer and would find the money for the general fund elsewhere.

“We have listened to the concerns of our brothers and sisters in the firefighter community, whom I have the utmost respect and admiration for,” Murphy said in a statement. “As a result, I can say unequivocally that we are taking this budget option off the table.”

Finding favor among firefighters

His retreat drew immediate praise from the firefighting community, including the leaders of the NJSFA.

“The Firemen’s Association has a long, proud legacy in this state, and we are grateful that the (Murphy) administration is committed to maintaining that legacy,” said Robert Ordway, the group’s president.

The Legislature established the state and local charitable associations in 1885 to fund “the relief, support or burial” of indigent firemen and their families. The groups rely on a 2 percent tax on fire-insurance policies written by out-of-state insurers on New Jersey properties, and the tax generates about $30 million a year. The revenue is split about 50-50 between the state association and the separately incorporated local associations to pay burial costs and give financial assistance to firefighters who demonstrate a need.

Little changed until 1994, when lawmakers held hearings on what was then a $90-million surplus. They instituted some reforms meant to ensure more money was used to help firefighters in need, including changing the definition of those who can receive the relief from “indigent” to “needy.” While expenditures can vary, the associations have since accumulated an additional $155 million in unspent funds, according to the OSC report.

The report also detailed some questionable assistance expenditures approved by the relief groups in recent years, including funding for someone struggling to cover the costs of owning two homes, and it listed a series of recommended policy changes for lawmakers to review. The OSC also compared New Jersey to other states that operate similar relief efforts, finding that many allow for a broader use of the funds they collect, such as for equipment purchases and training.

“The Legislature must consider the fundamental issue of how to best use the accumulated funds to most effectively assist New Jersey’s 37,000 firefighters while continuing to ensure existing benefits are paid,” the report said.

Funding for future catastrophes

But in response to the report, NJSFA officials raised concerns about depleting too much of the relief fund. That would leave it ill-equipped to handle the demand for relief that would follow a major catastrophic event like the 9/11 terrorist attacks, they said.

Singleton raised similar concerns during the budget committee hearing last week as he questioned Banking and Insurance Commissioner Marlene Caride about the fund’s surplus and Murphy’s proposed budget diversion. But during an interview yesterday, Singleton also pointed to the OSC report and suggested it may be time to enact policy changes that would allow some of the firefighter resources to be used for other purposes, such as for training or equipment purchases, while still preserving the proper reserves to cover all hardship expenses.

Upgrading oversight of the distribution of the relief funds to better protect against waste or fraud could also be a goal of a future reform bill, Singleton said, especially since a majority of the state’s firefighters serve on a volunteer basis even as they risk their lives on a regular basis.

“It does need to be retooled,” he said of the fund’s existing policies.

Singleton also said he plans to work closely with groups that represent the state’s firefighting community to ensure that any changes fit the needs of the firefighters themselves.

“Good policy comes when you get a broad group of people together to try and form a consensus,” he said.

Sen. Declan O’Scanlon (R-Monmouth), another member of the budget committee who has shown interest in the issue, has indicated he’s also been reaching out to firefighter groups for their input.

“Firefighters are a critical component of our public safety and first responder community,” O’Scanlon said. “These funds should be used for the betterment of our firefighters and perhaps improvement of the state of the sector itself, not to plug up completely unrelated budget holes.”

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