Gov. Phil Murphy signed his final state budget Monday night, a record $58.8 billion, for the fiscal year 2026. Murphy inked the budget after the state Assembly passed the legislation with a 52-27 vote Monday afternoon. The state Senate had passed the measure 26-13 earlier in the day. The legislation vote tracked near party lines.
Murphy said the bill strengthens the state’s fiscal position, provides the highest level of school funding in state history and fully finances the state’s pension system.
“This budget exemplifies our dedication to fiscal responsibility, affordability, and opportunity for all New Jerseyans,” Murphy said in a press release. “Over nearly eight years in office, we have maintained a steadfast commitment to building a stronger and fairer New Jersey and righting our fiscal ship. I’m proud that this budget caps off an eight-year journey to turn our state around and delivers greater economic security and opportunity to every family.”
The budget calls for $1.2 billion in tax/fee increases in gaming, tobacco, and pricier real estate, and the roughly $58.8 billion budget includes pension, school and tax relief.
Online gambling and sports betting will also see tax hikes to 19.75 percent, from 15 and 13 percent respectively.
Legislators made broader changes to a separate Murphy proposal that would have doubled the 1 percent fee on property sales valued above $1 million and imposed an overall 3 percent fee on those worth more than $2 million.
In the Legislature’s version, the fee would remain at 1 percent for homes worth between $1 million and $2 million but rise for more expensive homes, climbing to 2 percent for homes worth between $2 million and $2.5 million and increasing by another half percentage point for every $500,000 in value, to a cap of 3.5 percent on property worth more than $3.5 million.
Lawmakers also backed a measure that would lift the state’s cigarette tax to $3 per pack, from $2.70, and triple the tax rates on electronic cigarette cartridges to 30 cents per milliliter or 30 percent of the retail price for bottled fluid.
The budget was worked out by Murphy and legislative leaders Senate President Nick Scutari, D-22nd District, and Assembly Speaker Craig Coughlin, D-19th District.
The budget maintains a full pension payment, full school funding formula, property relief programs such as ANCHOR and StayNJ, and a $6 billion surplus.
The negotiations also resulted in an agreement to trim $100 million in state worker health care costs.
Sen. Paul Sarlo (D-Bergen), the Senate budget chairman, said the tax increases would help Murphy keep his pledge to pass along a $6 billion surplus to the next governor, who would have “a lot of leeway on how they want to govern and operate.” Murphy’s term ends in January.
Some critics such as Declan O’Scanlon, R-13th District, raised concerns about a structural deficit, lack of transparency and last-minute movement in the budget process.
“It’s falling like a ticking time bomb into the lap of the next governor – whoever he or she may be,” he said.
O’Scanlon also said the state is spending the last of the federal funds it got during the COVID-19 pandemic and added that the state is about to be saddled with a $3 billion to $4 billion structural deficit.
