N.J. Will Borrow $4.5 Billion as Pandemic Pain Hits States

New Jersey officials on Thursday approved a budget that hinges on borrowing $4.5 billion to cover basic operating costs, making the state one of the first to take on debt to plug a gaping financial hole during the pandemic.

Gov. Philip D. Murphy and his fellow Democrats who control the Legislature argued that the step was needed to avoid deep cuts to essential services, including education, transit and health care, in the absence of a deal in Washington on a stimulus bill.

Across the country states and cities have been pummeled by declining tax revenues and unparalleled levels of unemployment.

Illinois has also looked to balance its budget using $1.2 billion from a short-term lending program run by the Federal Reserve, and New York City’s mayor, Bill de Blasio, has asked the state for permission to borrow billions of dollars to cover operating costs.

New York’s governor, Andrew M. Cuomo, said on Thursday he was leery of permitting new borrowing — a budget tactic that has been disparaged ever since it brought New York City to the brink of bankruptcy in the 1970s.

New Jersey’s plan has been roundly criticized by Republicans, who sued to try to block the borrowing.