In the latest acknowledgement that the long anticipated ‘fiscal cliff’ is coming, the Murphy administration, in an email sent last week, notified the heads of all the cabinet departments that the state will pause approvals for discretionary salary increases and that each department should limit new hire requests to those that are “mission critical” to the functioning of the department, ROI-NJ has exclusively learned.
ROI-NJ also has learned the email, sent last Thursday afternoon, comes approximately seven weeks after the administration told all the department heads, in an email sent Oct. 1, that they should be prepared to cut their operating budgets by 5% for the Fiscal Year 2026 budget.
Both emails were seen by ROI-NJ.
The governor’s office acknowledged the emails but declined a request to comment.
Someone who is familiar with the situation but is not authorized to speak publicly on the directives, said the emails are intended to reinforce the idea that the state does not have unlimited funds and must adjust the way it spends money.
“They are warnings about the state of the budget,” the person said. “The governor is really focused on tightening the belt in terms of state spending.”
Thursday’s email, sent by the governor’s chief of staff, Tim Hillmann, said the freezes were being made to “conserve state resources.” It noted that the directive comes “effective immediately and with limited exception.”
Those exceptions include anything required by law, court order or collective bargaining. People who have been hired and are in the process of being on-boarded are excluded from the request.
The email on Oct. 1, which was sent by the Office of Management and Budget, asked each department head to submit their 5% savings proposals by Nov. 12. It is unclear how many departments did, though there is no reason to believe any did not.
The need to cut government spending should not necessarily be seen as a surprise. Those in state government have long known that New Jersey (as well as many other states) would be facing a “fiscal cliff” while preparing their Fiscal Year 2026 budget, as nearly all of the government funding from the pandemic will have run out – among other reasons.
How all of this will impact the governor’s budget for Fiscal Year 2026, his final budget, remains to be seen.
By nearly every metric, the state’s finances are in better shape now than when the governor took office in January of 2018. The state has made a full pension payment for the past four budgets (after decades of underfunding) and had a $6.1 billion surplus following the Fiscal Year 2025 budget.
Both of these actions are among many reasons the state has earned repeated upgrades by the credit ratings services during Murphy’s time in office.
That being said, the budget for Fiscal Year 2025, which was passed at the end of last June, was for $56.6 billion – or more than $20 billion more than the last budget of his predecessor, Gov. Chris Christie. It was an alarming total for some, considering the expected cliff that was ahead.
The Fiscal Year 2025 budget also came in at $1.8 billion more than the expected revenues, according to N.J. Spotlight’s John Reitmeyer, an undisputed expert on all things involving the budget.
Some have been suggesting this type of government spending freezes – and cuts – for some time. The governor appears to be agreeing with them.
At least that’s the view of the person familiar with the situation.
“This should be seen as the first warning shot,” the person said.
