Business groups across the state responded with cheers — and optimism — upon learning Gov. Phil Murphy was looking to reduce the size of government by cutting spending and freezing hiring.
ROI-NJ first reported that Murphy had asked each department to cut their spending by 5% — and that hires be reduced to include only ‘mission-critical’ employees and those required by law or collective bargaining.
These steps are initiatives the leaders of key business and economic groups have been pushing since the day Murphy took office — and certainly last summer, when the state passed its biggest budget yet at $56.1 billion.
Now the hard part comes: Executing the new vision.
Michele Siekerka, the CEO of the N.J. Business & Industry Association, said the steps Murphy has suggested are necessary, but they are just the first steps.
“As we’ve been cautioned for the last couple years, New Jersey is facing a fiscal cliff,” she said. “Now the hard work begins to reprioritize our spending in New Jersey and look for new opportunities that bring much-needed affordability to the state and address regional competitiveness.”
Tom Bracken, the CEO of the New Jersey State Chamber of Commerce, said his group is eager to help.
Bracken feels the cuts are great news for the state and the business community — especially since they come on the heels of the creation of an Economic Council, which will provide a regular forum for state officials and business leaders to discuss issues that will help stimulate economic growth.
“The cut in expenses while reducing the size of government and the Economic
Council are two things that we’ve been preaching for years,” he said. “The combination of the two is a great start to addressing our issue of the fiscal cliff, taking the pressure off people demanding new taxes.”
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.
The question is: Why now?
Some are speculating it’s a legacy moment for Murphy, who is entering his final year in office. Others are speculating it’s a jumpstart for the next chapter in his life, whatever that may be.
Audrey Lane, the president of Garden State Initiative, a conservative-leaning think tank that address economic policy, only knows this: It’s better late than never.
Her hope is that it will be the start to a fundamental change in government spending — not just a few cuts here and there.
“We’ve got to start looking at creative ways to cut back this mountain of overhead we have,” she said. “This is a great start, but we need to make structural changes in how we’re doing things.”
Siekerka couldn’t agree more.
“A budget of our current size is not sustainable,” she said. “We’ve known that for some time now.
“NJBIA stands ready and able to partner on the hard structural reforms that may be necessary to truly leave our next governor with a more sustainable state budget.”
Bracken is eager to help, too.
“This is exactly the right thing to do,” he said. “Even by the governor’s own admission, the state budget has grown significantly. With economic times a little uncertain, it’s the right time to address that growth, and that’s what he’s doing.”
