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Murphy unveils $58.8B budget for NJ

Keeps property tax rebate, includes deficit of about $1.2B

By: Katie Sobko
NorthJersey.com
USA Today Network - New Jersey

..... Governor Phil Murphy delivered his eight and final budget address Tuesday [02/25/2025] afternoon and preached fiscal responsibility while asking for support of his $58.1 billion funding plan, fiscal year plan in New Jersey's history.
..... The 2026 fiscal year plan includes funding for some programs that residents have responded positively to - like the ANCHOR property tax rebate initiative - while also adding new programs geared toward attracting reproductive health care professionals.
..... "With this budget, we will continue making historic progress i meeting our sacred obbligato to the people of New Jersey," Murphy said. "We will confront our state's greatest challenges - both honestly and responsibly."
..... The proposed budget does include a structural deficit, meaning the state is spending more than it earns, and the threaten of a federal funding freeze form Washington still looms large. Budget materials indicate that state is anticipating $26 billion in federal funding for the next fiscal year.
..... "While I sincerely hope that the situation in Washington settles down, and that we - in turn - have a normal, healthy budget season over the next few months, that is by no means a guarantee," Murphy said. "there is a distinct possibility that we will, instead, need to pursue a 'break the glass' strategy. What we must acknowledge - and adapt to - this new reality."
..... This budget proposal now passes int the hands of the Legislature where it will be reviewed - and most likely added to - before a final bill is voted on at the end of June and sent to Murphy desk for his signature.
..... Though Murphy tired to paint a rosy picture of the future of New Jersey, the fact remains that New Jersey spends more than it earns.
..... Murphy's proposed budget includes a deficit of about $1.2 billion.

What impacts could the Trump administration have on plan?

..... Murphy has made it clear that he is willing to work with the Trump administration in situation that would benefit the Garden State. Earlier this month [02/2025] he was nothing short of fawning when voicing his gratitude to Trump for "ending" the congestion pricing plans implemented by New York, though the plan is still in effect.
..... But the threat of losing out of billions of dollars as the congressional budget deadline approaches and Trump's funding freeze lingers as a "real game changer we all have to be aware of," Treasurer Elizabeth Maher Muoio said.
..... "We plan on having an influx of federal dollars for certain plans. this budget makes those assumptions," she said. "If that money were to be cut we would either have to make up the difference somehow with state dollars or our residents would be essentially denied the services."
..... She went on say the "number we're hearing area sobering."
..... Murphy did include an additional $1 million to the attorney generals' office to continue pushing back against things like the funding freeze and reversal of DEI initiatives in court. This money will be used to hire additional attorneys within both the attorney general's office and the solicitor general's office.


School funding formula continues

..... The school funding formula known as S2 will again be paid in full with more than $12 billion in school aid being sent to districts throughout the state. This is the bulk of the proposed budget's new spending.
..... Murphy also included a full pension payment for the fifth year in a row for retired members of the state's workforce. That payment of $7.2 billion would have been $1.1 billion if the state hadn't skipped payments for decades.
..... The governor also included a surplus of $6.3 billion or 10.9% of the total budget. That money can be sued to keep the government up and running and provide money in the bank in case tax revenues fall short of what is anticipated.

What's next for NJ Transit?

..... NJ Transit would receive about $815 million form the corporate transit fee, according to estimates in Murphy's budget proposal. the total state subsidy for the agency - including revenues from the new corporate transit fee, Turnpike, clean energy Fund, and general fund - comes out to about $1.44 billion, more than double the $670.1 million the agency received last year. [2024]
..... Another $767 million form the transpiration trust fund would go to NJ Transit for capital projects.

Sales tax increase are proposed

..... In order to increase revenue, Murphy is proposing sales tax reforms. That includes both expansion and new exemptions.
..... New exemptions would include a variety of baby items, such as cribs, car seats, bottles and strollers.
..... The plan would increase the Internet gaming and sports wagering tax rates to 25%, up from 15% and 13%, respectiveness.
..... It would also adjust the tax rate on the assessment on real property to 2% for property over $1 million and 3% for property over $2 million.
..... Taxes on cigarettes, vaping and alcohol would go up to 30 cents, 30% and 10% respectively, and would generate a projected revenue of $69 million.

Reproductive health, family planning investments continue

..... Among the programs in Murphy's proposed budget to receive funding is a new incentive for reproductive health care professionals form other states to move to New Jersey and provide health care without reproductive health care restrictions.
..... In all, family planning services and reproductive health programs would receive $52 million.
..... Another $35.8 million would go to Family Connects NJ, a program that has provided 2,300 free in-home nurse visits to families with newborns in 11 counties. The plan also include $10 million to provide state employees with full pay while they are on family leave caring for a newborn.

What about 2026 FIFA World Cup?

..... Another $10 million will go to the New Jersey Sports and Exposition Authority for "International Events, Improvements and Attraction."
..... While that doesn't mean it will have to go to the 2026 FIFA World Cup, the tournament is among the biggest events on the planet and starts as the next fiscal year ends and is something Murphy noted as part of his "dream for New Jersey's future."
..... "It is a future that will begin next year, [2026] when millions of soccer fanatics - from around the globe - will be drawn to our region to watch the world's greatest game, on the world's biggest stage, with the 2026 FIFA World Cup final at MetLife Stadium," he said.

What about tax relief?

..... With StayNj slated to start in January 2026, Murphy proposed $280 million for the program. This is the third year the program has been funded and it is expected to cost the state about $1.2 billion annually.
..... Among the prerequisites for funding StayNJ is a surplus of 12% or higher. Murphy's proposed budget does not meet the criteria.
..... About $2.4 billion is included to continue ANCHOR as well. Payouts will still range form$450 to $1,750.
..... These programs , along with senior freeze, will use a combined application that will be available next month at propertytaxrelief.nj.gov .

..... Katie Sobko covers the New Jersey Statehouse. Email sobko@northjersey.com.

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