Governor Phil Murphy proposed a $58.1 billion state budget on Tuesday, calling for increased spending on K-12 education, public transit, and property-tax relief while seeking $1.2 billion in new taxes and fees.
Murphy’s final budget proposal of his two terms includes a tax hike on alcohol, cigarettes, online gambling, and luxury home sales. The plan also fully funds the state’s annual pension obligation and provides additional resources for NJ Transit, which has struggled financially since the pandemic.
“[This budget] reflects our ongoing, and unrelenting, commitment to building a state that is stronger, fairer, and more prepared for the future,” Murphy said in his address to lawmakers.
The spending plan would leave a $6.3 billion surplus, a safeguard against potential federal funding cuts. Congressional Republicans and former President Donald Trump have signaled an intent to reduce Medicaid and other programs, which could cost New Jersey billions in aid.
NJ Property Tax Relief
Under Murphy’s proposal, direct property-tax relief would continue through the Anchor program, while the new Stay NJ initiative would allocate $600 million to provide tax relief for senior homeowners. The program is set to launch in 2026 but lacks long-term funding.
NJ Transit Funding
NJ Transit would receive over $800 million in new funding, supported by a temporary tax on corporations. The budget also increases formula aid for public schools by $385 million, bringing total K-12 funding to more than $12 billion.
Proposed NJ Budget Draws Criticism From Republicans
Despite the increased spending, the budget still carries a structural deficit. The state expects to spend $1.2 billion more than it will collect in revenue, though officials note this is an improvement from last year’s $2.2 billion shortfall.
Republican lawmakers criticized the proposal, arguing that it leaves the next governor in a precarious financial position.
“This budget is anything but affordable,” said Assemblywoman Nancy Munoz, a Republican from Union.
The Democratic-controlled Legislature will now review Murphy’s plan, with negotiations and public hearings scheduled in the coming months. Lawmakers must pass a final budget before the June 30 deadline.
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