The Governor of New Jersey, Phil Murphy, laid out a comprehensive state budget on Tuesday, totaling nearly $58.1 billion. As he prepares to conclude his gubernatorial career, Murphy has focused this final budget on increasing funding for educational institutions and public transportation. However, there is concern regarding the uncertainty surrounding federal funding, which could potentially impact the financial plans.
Addressing a joint session of New Jersey’s Democratic-led Legislature, the governor positioned this proposal as a realization of his electoral promises. Key elements of the budget include complete funding for the state employee pension scheme, increased support for K-12 education, and financial assistance for the historically underfunded New Jersey Transit system.
Murphy emphasized that despite considerable progress, challenges remain. He highlighted “the noise of chaos and confusion in Washington” and announced a plan to reserve more than $6 billion in surplus funds as a buffer against “unforeseen challenges.”
The governor confirmed that ensuring economic security remains the primary focus: “We’re not done yet, and over the next year our absolute top priority — as it has been since Day 1 — is delivering economic security.”
The timing of this proposal coincides with federal government budgetary freezes and ongoing congressional discussions on national spending. State Treasurer Elizabeth Muoio noted that federal aid, particularly $27.5 billion earmarked for Medicaid to assist low-income individuals, could be compromised due to these federal uncertainties.
“We’re sort of being put on notice that some draconian cuts are being presented. We don’t know what they are,” Muoio stated, reflecting the concerns shared by other states. “You can’t predict what’s going to happen but what we’re seeing is not good.”
Murphy’s budget suggests a 3.8% increase in spending compared to the previous year’s proposal, although actual spending remains slightly below the approved amount for the current fiscal year. This variance stems from legislative amendments and extra spending. Legislators will deliberate on this proposal, aiming to pass a balanced budget by the constitutional deadline of July 1.
The governor’s budget boost occurs alongside some revenue challenges, with predictions indicating a decline in specific revenue streams like corporate taxes. This has fueled Republican criticism of the budget’s expansion from the $37.4 billion when Murphy first took office in 2018.
During his tenure, Murphy has enacted several progressive policies, raising taxes on income over $1 million and allowing business tax cuts to expire, thereby increasing state revenue. New taxation measures include a 2.5% transit fee levied on companies with profits exceeding $10 million.
Under Murphy’s governance, public school funding has significantly increased, moving from $8 billion annually during former Governor Chris Christie’s administration to $12 billion in the 2026 fiscal budget proposal.
If approved, this budget would establish a $6.3 billion surplus, a considerable increase from the $500 million rainy day fund Murphy inherited. Additionally, the governor and lawmakers are committed to delivering billions in property tax relief, though the longevity of these benefits remains uncertain without a sustainable funding source. New Jersey continues to grapple with some of the highest property taxes nationwide.
