Gov. Phil Murphy’s administration is cutting spending and limiting hiring to address New Jersey’s growing budget deficit. Departments have been told to find 5% savings, and some state worker pay raises are on hold.

The state’s budget shortfall, currently $2.1 billion, is expected to grow to $3.8 billion next year due to rising costs and lost revenue sources. Only critical hires will move forward, and raises tied to legal or union agreements will still be honored, officials said.

New Jersey’s budget has grown significantly under Murphy, from $34.7 billion in 2018 to $56.6 billion this year, with higher spending on pensions, school aid, and tax relief programs like Anchor.

Assembly Budget Chair Eliana Pintor Marin supported the move, calling it necessary, but Republican lawmakers warned broad cuts could harm services.

The state plans to end the fiscal year with $6.2 billion in reserves, though rising costs from programs like property tax relief and new corporate fees add pressure. Murphy’s final budget plan, due in February, will reveal more details.