In Trenton, New Jersey, Democratic Governor Phil Murphy has presented his final budget, slated at approximately $58.1 billion, as he approaches the end of his two-term tenure. The proposal, which prioritizes increased funding for schools and public transit, faces potential challenges due to uncertainties surrounding federal contributions.
In a speech to the predominantly Democratic Legislature, Murphy outlined his ambitions for this budget, stressing the commitment to fulfilling his original campaign pledges. This includes ensuring full funding for state worker pensions, enhancing K-12 education funding consistently, and directing new tax revenues to the financially struggling New Jersey Transit.
“While we’ve made significant strides, it’s important to recognize that our journey isn’t complete,” Murphy stated. Highlighting the turbulent environment in Washington, he assured he would reserve over $6 billion in surplus to address unexpected economic hurdles. Murphy reaffirmed his dedication to prioritizing economic security as he navigates his final year in office.
The budget unveiling coincides with a turbulent period of federal funding discussions, as a congressional deadlock may potentially disrupt state-level planning. Over $27.5 billion in federal aid, particularly aimed at the Medicaid program which benefits low-income residents, hangs in the balance, as explained by State Treasurer Elizabeth Muoio. She emphasized the unpredictable nature of these potential federal cuts, creating a challenging environment for planning.
Murphy’s budget outlines a 3.8% spending increase from the previous year’s proposal. However, the actual expenditure reflects a slight decrease due to legislative revisions and additional spending adjustments. State legislators now have the task of balancing this proposal by the July 1st constitutional deadline.
The current economic outlook also raises concerns about certain declining revenue sources, such as corporate taxes, amidst an expanding state budget which has grown significantly since Murphy’s initial $37.4 billion budget in 2018. These expansions have sparked criticism from Republicans opposed to the rising budget size.
Murphy’s tenure has been marked by progressive measures, including tax hikes on high-income earners and lapses in business tax cuts that bolstered state treasuries. Additionally, the introduction of new taxes, like the 2.5% public transit fee for companies earning over $10 million, reflects his fiscal strategies.
Under Murphy, K-12 education funding has seen a substantial increase, rising to $12 billion in the proposed fiscal 2026 budget, a leap from the stagnant roughly $8 billion annual funding during the prior Republican administration.
If the current budget is approved, it would establish a $6.3 billion surplus, a significant rise from the modest $500 million rainy day fund Murphy inherited. It also pledges extensive property tax relief. Yet, without a determined funding source, maintaining these benefits could challenge future administrations. New Jersey remains among the states with the highest property taxes nationwide.
