Lawmakers introduced New Jersey’s next state budget, slated for a record size at $60.7 billion, late on Sunday night, a little more than 48 hours before the deadline for the spending plan to be passed and signed to avoid a government shutdown.
The budget will come in at the size Gov. Mikie Sherrill first proposed in March. It will leave New Jersey a $6 billion surplus to cushion the state against further economic disruption or fallout from federal policy changes. And it will cut the state’s spending deficit, which had been projected at about $3 billion, roughly in half.
Sherrill and legislative leaders announced last week they’d reached a deal on a spending plan that included major reforms to the StayNJ property tax relief program, which had been a top point of debate in this year’s budget negotiations. The program currently offers rebates up to $6,500 for any senior making up to $500,000. It will now be changed to cap eligibility at a $200,000 income limit, and award rebates on a sliding scale so that people with lower incomes get more benefits.
The largest single item in the budget remains roughly $12 billion in state aid for school districts around New Jersey. But that aid is allocated to districts based on a formula that continues to leave some districts underfunded. Sherrill and top lawmakers have said the school funding formula should be reformed, but the new budget does not tackle that issue.
The budget also includes a full pension payment and boosts property tax relief programs to record levels.
Sherrill had proposed a budget that cut funding from a variety of programs around the state, and she challenged lawmakers that if they wanted to restore any of that funding, they would have to find a matching cut elsewhere to get her approval. State Senate Majority Leader Teresa Ruiz said lawmakers tried to protect as many programs helping state residents as possible.
“ When we were initially presented with this budget, there were a lot of programs that protected people in the state of New Jersey that fell short from that human investment,” Ruiz said before voting to advance the budget bill. “I'm just very proud of the work that the legislature did in conjunction with all of the principals to try and put some funding back in those spaces and make some programs whole.”
New Jersey Policy Perspective, a progressive think tank, praised the budget for making progress in getting the state on firmer financial footing. Nicole Rodriguez, the group’s president, said that work would need to continue in coming years.
“The hard part is still ahead. Low-income households are still fighting to pay daily expenses, and the fallout from federal dysfunction could strip hundreds of thousands of New Jerseyans of health insurance,” Rodriguez said in a statement. “To meet those needs, revenue will have to increase. That means going further — closing more loopholes on corporations and the wealthiest individuals."
Most of the spending plan’s details remained unknown until the budget bill was introduced and first taken up by the Senate and Assembly budget committees on Sunday evening. The budget cleared the Senate committee first, just before 11 p.m., and then passed the Assembly committee as the clock neared midnight.
“ Nobody who's going to vote for this thing tonight has read it because we just received it. Fifteen minutes ago, I got 56 pages of line items and budget wording. Well, it's impossible to go through that in that amount of time,” said state Sen. Declan O’Scanlon, the top Republican budget officer, before he voted against advancing the budget bill. “ No one who votes for it tonight is going to have read it or really knows what's in it.”
Other bills critical to the budget deal were also advanced in the Sunday evening hearings, like one to expand the state’s child tax credit, another to assess a new fee on businesses with 50 or more employees who receive Medicaid, and a trio tightening loopholes in business taxes.
Chris Emigholz, chief government affairs officer for the New Jersey Business & Industry Association, said his organization liked parts of the budget but said the business taxes would harm the state.
“ We are concerned that after this budget's done, we are less affordable than we were before this budget. This budget is still based upon new taxes, almost a billion dollars,” Emigholz said. “This budget is based upon a tax level already that was among the highest in the nation, and that led to us having a higher unemployment rate than most states.”
Lawmakers also advanced a bill to spend an extra $359 million in the current budget; that bill was also introduced shortly before being voted on.
O’Scanlon took particular exception to the supplemental spending bill, criticizing it as “ an interesting shell game” that served to hide spending.
“ There are hundreds of line items that would have been spending in the '27 budget that are now being backfilled or prefilled by the supplemental bill,” O’Scanlon said.
All of this legislation is now set for final votes in both chambers. Planned voting sessions for Monday have been cancelled, setting up a marathon day in Trenton on Tuesday to get it all done before the July 1 deadline.
