Can NJ count on federal funding?
State Budget proposed amid uncertainty in DC
By: Katie Sobko
NorthJersey.com
USA Today Network - New Jersey
..... The prospect of a federal funding freeze continues to loom large throughout the country as a coalition of attorney general sue the Trump administration to ensure states receive money for programs like Medicaid and Head Start.
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But the real possibility remains that New Jersey will not receive funding from the federal government , especially considering the budget process playing out in Congress.
..... That didn't stop Governor Phil Murphy from proposing a budget for New Jersey's state government that includes upward of $26.3 billion from the federal government, about $1.5 billion more than last budget. [2024]
..... State Treasurer Elizabeth Maher Muoio said during a briefing Monday [02/24/2025] that the governor's budget proposal was crafted based on the assumption the state would receive the federal funding it was entitled to.
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"We plan on having an influx of federal dollars for certain plans," she said. "If that money were to be cut, we would either have to make up the difference somehow with state dollars, or denied the services because we would not have the federal dollars to help support them. So, that will be the issue we face going forward."
..... She explained that work begins in September for the fiscal plan proposed in February and singed into law each June so this "budget has been in development ... prior to election., prior to announcements about potential Medicare or other hits."
..... Muioi also noted that, in 2020 , Murphy announced his budget and "two weeks later it wasn't worth the paper it was printed to."
..... Senate President Nick Scutari, state Senator Paul Sarlo and Assemblywoman Eliana Pintor Martin, the budget chair in their respective chambers, are watching the federal budget process play out in Washington with concern.
..... Moments before Murphy's address on Tuesday[02/25/2025] Sarlo said that while the speech is usually the starting point of the budget process, it is "really a starting point due to uncertainty of the federal dollars.
..... "This budget could be a complete makeover in a couple of weeks," he said. "We need to find out what the federal, especially on the Medicaid dollars,and as always tank God we have a healthy surplus ... but revenue raisers have got to be the last, last resort."
Sarlo went on to say there are going to have to be cuts during the budget process this year [2025] to minimize the need for the state to raise revenue through sales tax hikes.
..... Pintor Maitin, his counterpart in the lower chamber, said the Legislature has to wait and see what happens in Washington as Congress drafts a budget of tis own in March. [2025]
..... "Right now, it;s in our minds, but we're not really talking or looking at anything in particular," she said.
..... Scutari said that he had met with Assembly Speaker Craig Coughlin and Murphy on Tuesday [02/25/2025] and federal funding cuts were discussed.
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"It's a really scary time right now and there's not much that we can do about it if they have gargantuan federal budget cuts. We cannot make up that money," he said.
..... When asked if programs like the StayNJ property tax initiative oculd be cut to make up the difference, Scutari said it depends non how big the cuts are but, :I think the services that are cut are probably going to be eliminated" because "it will impossible for us to plug those holes."
..... The program that would be most significantly impacted is Medicaid but there is also concern for projects funded through Department of Transportation as well as education programs.
..... Muoio noted Medicaid is a "huge hit," that includes some hospital provider funding, and amounts to more than $10 billion in federal funding.
..... She also noted that Kris Kolluri, new president and CEO of New Jersey Transit, has concerns about what will happen at that agency.
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Kolluri said Thursday [02/27/2025] that any reductions in federal funding will have a "direct impact on our ability to provide service."
'These are people's lives'
..... Administration officials also cited concerns about cuts for special education or Title I schools.
..... And while things like the surplus provide a "cushion," it isn't enough OT absorb lost funding for major programs because "our surplus, even at 10.9%, is not going to handle a $10 billion hit to just Medicaid, or some of these other changes we're seeing," Muoio said.
..... She went on to say the anxiety over potential federal funding reduction is not unique to New Jersey.
..... "The hue and cry you heard when the system was going to shut down or did shut down for a while a few weeks ago, was a national hue and cry," Muoio said. "these are people's lives, their health. So, it's very sobering, the idea that they may even be considering some of these cuts." And while this budget proposal is a starting point, the Legislature and the governor's office still have a months-long negotiating process ahead of them after decisions are made in Congress in the coming weeks.
..... "We're sort of being put on notice at this point that there are some draconian cuts that might be presented. We don't know where they are," Muoio said.
..... "We are not the only state that's going to be facing these issues. These are people's lives. But everything will be on the table. "We're going to have to , as we have made for eight years now, we'll have to make calls about what we can and can't afford, where we tweak the budget to cover needs.'
..... Katie Sobko covers the New Jersey Statehouse. Email: sobko@northjersey.com