Gov. Phil Murphy says state finances have fallen off a cliff amid the coronavirus pandemic, and he’s warning of historic layoffs at all levels of government if New Jersey is unable to muster the money it needs to meet its obligations.

Cities, towns and school districts are bracing for the hit, even as they say they are scrambling to keep their workers on the job, to avoid adding to New Jersey’s already bursting unemployment rolls.

Cuts to payrolls and public services are just one unappetizing potential consequence — so are property tax hikes that cash-strapped residents and idle businesses would find hard to swallow.

Communities across the state "are extremely worried,” said Michael Darcy, the executive director of the New Jersey State League of Municipalities. “They are worried because every piece of their financial puzzle is up in the air.”

Just how bleak the picture is for local government won’t become apparent until at least early May, municipal and school officials say, when quarterly property tax bills come due. If payments drop off significantly, that would spell trouble, since they make up the lion’s share of local revenue that keeps City Halls and schools running.

Mayors and school superintendents are also keeping a close eye on whether state aid they’ve been promised will dry up as New Jersey government tries to plug its own financial holes.

And Murphy warns the state’s ability to help would be severely curtailed if the Trump administration doesn’t scrap new strings attached to the latest emergency federal aid package.

When the piper will come calling is unclear, and property tax collections may have some stability, since many homeowners pay them through escrow accounts their mortgage companies maintain. That could delay some of the pain that officials know is coming.

“July is certainly a time to watch,” Darcy said. “Could June be a time to watch? It depends on how tight the cash flow is for the municipality.”

Property taxpayers say they are feeling the pinch.

Michael Gilbert of Maplewood has been out of work as an analytics and planning manager since last year, despite some Zoom interviews since the start of the public health crisis. He’s lived in the same house his entire life, and plans to tap into his savings to cover his May property taxes.

Gilbert wonders how long that can last, saying he “may have some problems” when the next bill comes due in the summer. He said he is frustrated there’s no leniency.

“I’m sure there’s a lot of other people in the same boat,” he said.

John Donnadio, the executive director of the New Jersey Association of Counties, said there are estimates municipalities are looking at a cumulative $2 billion revenue shortfall and counties are going to be socked with $1 billion in losses.

If steep drop offs play out, county and local governments may ask the state for permission to exceed a 2-percent cap on spending increases. The cap has been credited with slowing the growth of New Jersey’s sky-high property tax bills — which hit an average of $8,953 last year. But it could face pushback from local leaders hoping to avoid layoffs, furloughs and diminished services.

The uncertainty, Donnadio said, "it kind of gives me chest pains to think about it.”

Already, Murphy has frozen $920 million in state discretionary spending, including $44.8 million in municipal aid and $142 million earmarked for property tax relief. School officials fear the $9 billion in aid they’ve based their budgets on — proposed by Murphy before the outbreak gripped New Jersey — could now also face the chopping block.

“Having the budget and having the money may be two [different] things,” said Richard Bozza, the executive director of the New Jersey Association of School Administrators. “Who knows what dire straits we may be in."

Murphy has repeatedly warned of the state’s bleak budgetary picture, even as his administration has not released new economic forecasts that account for the disease’s devastation. The Department of Education says it is too early to tell how aid to schools will be impacted.

“As the situation evolves, we will work closely with school leaders, and all stakeholders in the education community, to keep them immediately informed of any updates, changes and guidance,” Michael Yaple, a spokesman for the department, said in a statement.

The question mark comes as New Jersey has shaken up its school funding formula to address longtime inequities in how aid is distributed, creating new winners and losers. While most of the state’s 584 districts are in line for an increase in the money they receive, nearly 200 are already absorbing hits to their bottom line under the new metrics.

Those districts “are struggling to meet cuts to begin with,” said Susan Young, the executive director of the New Jersey Association of School Business Officials. “If there’s anything else on top of that, it will make it all the more difficult.”

Among those losing aid are Hopatcong Borough Schools, which educate 1,500 students in Sussex County. The district’s budget anticipates a $1.7 million decrease from the state — an 18 percent drop — and already the school system is laying off four teachers and eliminating another position through retirement, said Superintendent Arthur DiBenedetto.

Whether coronavirus will add to those woes remains unclear, DiBenedetto said. He called the outbreak a “mystifying circumstance” that makes predictions tough. But he said he isn’t panicking.

“I don’t know what’s going to happen," DiBenedetto said. "I’ll be very interested in figuring out the bottom line when this school year is done.”

On Saturday, Murphy called on Congress to bail out the states, saying New Jersey "will have layoffs that will be historic” without outside help. Murphy has also discussed borrowing as much as $9 billion from the Federal Reserve to cover the state’s loses. He says both tracks are necessary to avoid financial disaster.

Murphy said Wednesday that New Jersey faces “dire” consequences if more federal aid is denied, with harm that could “dwarf the Great Recession." His feud with Washington continued on Thursday, when he bristled over restrictions the Trump Administration has placed on $1.8 billion in aid that New Jersey has already received.

“Sadly, the message from Washington to our first responders and to our educators is clear," Murphy charged. "As you work tirelessly to stop this pandemic, to keep people safe, our national leaders think you are not essential and that, in fact, you should fear for your jobs.”

In many local communities, the agony is already being felt. Not only are cities and towns shouldering new expenses as they fight the coronavirus, but they are also losing revenue streams: collections from parking meters have dried up, as have hotel occupancy taxes and fees from business licenses and building and fire permits.

In Hoboken, Mayor Ravi Bhalla announced last week that the city was laying off 26 employees — 4% of its workforce — to help plug a projected budget deficit of up to $15 million.

In Jersey City, Mayor Steve Fulop has offered buyouts to municipal employees with at least 15 years of experience as the city grapples with a $70 million budget shortfall. And Newark Mayor Ras Baraka warned Thursday of furloughs or layoffs as his city grapples with a $143 million shortfall.

The Somerset County parks system lost $124,000 in revenue in March from the county-run stable and permits, said Geoffrey Soriano, director of the park commission. But the real pain is still to come.

Murphy’s March 21 order closing golf courses statewide will cost the county and its five public courses $730,000 by the end of April.

“Golf is the Somerset County Park Commission’s lifeline,” Soriano said, estimating each month they remain closed between now and July will cost $876,000 to $952,000.

“If golf does not open by July 1st, frankly, we need to come up with a plan as furloughs or layoffs might come into play and they could impact our ability to operate,” he said.

Trenton Mayor Reed Gusciora estimates his city’s budget could be in the red by as much as $25 million. He called layoffs a last resort, saying urban areas already have enough unemployment without government adding to the ranks.

Gusciora said he is hopeful state aid will ultimately come through.

“We’re told, ‘Don’t worry about it,’" Gusciora said. "But I’m sure you’ve heard, ‘The check is in the mail,’ many times.”

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Riley Yates may be reached at ryates@njadvancemedia.com. Find NJ.com on Facebook.

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