Gov. Phil Murphy, in one of his final chances to impact the state, laid out his budget plans for fiscal year 2026 Tuesday during a joint session of the Legislature.
It was a mixed bag of ideas.
While many will note the numerous cuts he wants to make to the budget in recognition of challenging economic times, many note the budget proposal of $58.1 billion essentially is the same as the budget appropriation for fiscal year 2025. Not dramatically lower, as some had hoped.
And while the budget contains a projected surplus of $6.3 billion, the expenditures are projected to be $1.2 billion more than anticipated revenues – though that figure is lower than the $2.2 billion structural gap in fiscal year 2025.
Not sure why the state isn’t spending only what it expects to take in? Us, too.
Tired of reading numbers too big to comprehend? Us, too.
So, here are six takeaways we’re taking away from the proposed 2026 budget.
6: Commitment to (full) pension payments
The governor came into office ranting about the need to make good on our promises and he essentially has done just that. The budget includes a full $7.2 billion pension contribution, the fifth consecutive year the state has paid its bill. The depressing news: Had the state been doing this all along, the pension payment would have been approximately $6 billion less.
5. Commitment to cutting property taxes (really?)
The governor will continue to tout historic property tax relief. And it’s accurate to say the money returned from the ANCHOR program (approximately $1,500 to homeowners) is more than twice the relief given before he took office. That being said: It’s hard to continue to tout cuts while continually acknowledging the state isn’t affordable. And while the governor touts the Stay New Jersey program aimed at helping seniors (which will be fully funded), few think the program makes financial sense. It will be the next governor’s issue – and it figures to be a budget-buster.
4. Taxes on business
There was no surprise Corporate Transit Fee – as there was last year. But there were some minor asks, including a $2 tax on e-commerce vehicles that seemingly will cause more annoyance than revenue ($20 million) – not to mention an increased tax on sports betting. As for the Corporate Transit Fee, that is projected to bring in $868 million. Not as much as last year – and certainly not as much as will be needed to fix NJ Transit, though Murphy says he wants to replace all outdated train cars and buses. Not sure if that will happen, but we are sure about this: The Corporate Transit Fee is now firmly part of the budget. Good luck ever getting rid of it.
3. Commitment to health care, progressive values
There’s $108 million request for the Affordable Housing Trust Fund, $40 million proposal to add to the Down Payment Assistant program, $165 for the continuation of the Cover All Kids and NJ FamilyCare health insurance programs, $52 million for family planning – and a new incentive program (details to come) that would be used to bring OB/GYNs and other health professionals to come to a state where they can provide health care without government interference. The budget also includes $1 million to the Attorney General’s project for federal accountability – to protect citizens’ rights in federal and state courts.
2. Significant (maybe) spending cuts
Murphy has long been a friend to many – that’s what happens when you have extra pandemic relief funds to pass around. Those days are gone. Murphy wants to remove all one-time appropriations and drastically limit (if not eliminate) discretionary and non-competitive grants. Of course, all of this has to be approved by the Legislature – and it’s their pet projects that are being cut. Good luck.
1. None of this may even matter
Really? Yes. Potential cuts in funding from the federal government (certainly there is plenty of talk around Medicaid) could upend everything in the budget. Murphy acknowledged as much in his address. The good news: The state has been there before (remember the pandemic). The bad news: The potential shortfall is so great that there are no quick fixes – no federal bailouts coming. The severe cuts? Those would be kept – and then some. The surplus? That will be gone. Murphy is determined to leave the state in a better place than he found it. And, barring massive cuts from D.C., he will.
