Gov. Mikie Sherrill on Tuesday outlined a record $60.7 billion budget that increases resources in areas like public school aid and mass transit and reduces spending elsewhere. She also warned the Legislature: This administration, unlike the last one, won’t give away hundreds of millions of dollars in last-minute requests for pet projects. “These days, we simply can’t afford that,” she told a joint session in Trenton.
Lawmakers in the coming weeks will debate her priorities and their own for the fiscal year that starts July 1 as New Jersey faces a 2027 structural budget gap that Sherrill says she can partly close. If spending isn’t reduced, the Sherrill administration has warned, a $7 billion surplus could run dry in just a few years.
How does the governor, who took office in January, plan to navigate? This interview has been lightly edited.
Joanna Gagis, anchor: You’ve talked about the deficit that the state is facing. It was $3 billion. You’ve knocked it down to, I believe, $1.6 billion. Why not get to a zero budget deficit?
Gov. Mikie Sherrill: I would love to, but what we’ve done with this budget is account for some of the cuts that we’re seeing from the federal government — over $1 billion — and making sure that we’re presenting the most fiscally responsible budget this state has seen in years.
We have the structural deficit. We’ve cut $2 billion in spending. We still fund our pension debt. And at the same time, we don’t raise individual taxes on anyone. In fact, over the past eight years, we’ve seen our budget go up on average by 6.8%. This budget only goes up 1.6%. That’s actually under inflation. So really focusing on driving down costs for people here in New Jersey.
JG: You’re just getting ahold of the first budget. But I wonder if you’ve projected forward? The way that I see it, you’ve extended the surplus now maybe three-and-a-half years, based on the spending, if nothing increases next year. Is this something where you intend to increase that surplus, or is staying flat here the goal?
MS: Well, in the near term, I’ve seen this as sort of a two-year budget to start with. So in the next year, I’d like to see us get to no structural deficit, and then we can talk about getting a surplus, because in that way, we can have the ability to loan out money for building housing that people can afford, and different programs. Sometimes there’s matching funds that we can unlock, federal dollars, if we have state dollars to spend.
Right now, we’re just kind of captive to these bad spending decisions that have been made historically. As I said in my budget address, if we had just paid our bills over the past 30 years instead of spending $7 billion a year on this pension debt, we’d only be paying $1 billion.
“If you think we’ve made some bad decisions, then tell me where we’ve made the bad decisions but also tell me how we are going to continue to drive down costs.”
JG: Your speech, in some ways, felt like a reprimand to this Legislature that passed budgets under the Murphy administration. Some of them at various points, including Assembly and Senate leadership, didn’t seem too thrilled with some of the things you were proposing. Did you discuss your plans to trim back, especially when it comes to the Stay NJ property-tax rebate program for seniors?
MS: I reached out, or my team reached out. We have touched base with every single member of the Senate and Legislature. We were discussing what their focus was, and what I heard from them was a real desire to get ahold of this budget. So many of the decisions have been made over decades. We didn’t get to this point in one session alone. So I have heard from people who have proposed different ways of moving forward for years, and I think many members of our Senate and our Assembly are really excited to move forward in a way that is going to invest in the future.
JG: Do you think they share your vision for where to cut?
MS: I think some do, and when they don’t, I said, “Come to me. If you think we’ve made some bad decisions, then tell me where we’ve made the bad decisions but also tell me how we are going to continue to drive down costs.”
JG: You also, in many ways, took aim at the business community, focused largely on big business in this state. You want to see more contributions to health insurance, you want to end the alternative business calculation. But some from the business community say: Don’t ask businesses to balance the budget of the state; it’s just driving them out. Do you disagree with that?
MS: I certainly believe deeply in businesses. And I think sometimes, Trenton hasn’t really appreciated how important our businesses are. And so, no, I didn’t take aim at them. In fact, my “Save You Time and Money” agenda was built on the things I’ve been hearing for over a year now from the business community: How hard permitting and regulatory requirements are for them, how they go from the Department of Transportation to the Department of Environmental Protection and see different regulations and rules and have a really difficult time. They don’t know how long a permit is going to take, so we built the permitting dashboard. We’ve cut down on the registration fees.
What I’ve also done, though, is some of our tax programs were meant to help small businesses. And because the federal tax plan has changed, they were suddenly opened up to a lot of different businesses. So what we’ve done is close some of those loopholes so they really can focus on that diner or the mechanic down the street or our small businesses, which are really the lifeblood of our communities.
JG: Youth mental health is a big focus for you. You’re going to put some dollars behind that — really look at youth safety online. That seems to get a lot of bipartisan support. Do you think that that’s going to be an area where you can move legislation?
MS: Every parent knows that we are failing our kids when it comes to social media and the devastating impacts are seen throughout our communities. This is so key and government has failed here, the federal government.
But New Jersey — we are going to take strong steps to protect our kids. I want New Jersey to be a leader in this space. That’s why we’re setting up the social media observatory, because Big Tech has canceled any studies because they know how bad it is. We are going to do our studies, and we are going to protect our kids and give parents the resources that they need to better understand this.
This story is made possible in part by the Corporation for Public Broadcasting, a private corporation funded by the American people.
