Lawmakers in both legislative chambers approved a $60.7 billion spending bill and hundreds of millions in additional funding that will take New Jersey’s overall expenditures above $61 billion just hours ahead of the budget deadline Tuesday.
The budget, the largest in New Jersey history, maintains New Jersey’s pension payment, promises $12.4 billion in school aid, and narrows a marquee property tax relief program aimed at seniors that has for years faced questions about its viability.
“This budget runs towards our toughest problems, not away from them. It’s the most fiscally responsible budget passed in decades and invests in the priorities that matter most to working families,” Gov. Mikie Sherrill said at a press conference Tuesday night.
The bill, which passed 26-14 in the Senate and 58-20 in the Assembly with one Republican vote in each chamber, calls for New Jersey to spend about $1.4 billion more than it takes in through taxes over the fiscal year that begins Wednesday and would leave the state with about $6 billion in surplus a year from now.
The spending proposal Sherrill unveiled during her March budget address called for across the board cuts in an effort to narrow New Jersey’s structural deficit, the gap between its recurring spending and revenue.
Lawmakers have reversed some of those cuts, including a proposal to zero out $20 million in funding for summer tuition aid grants, but other items retained lower funding levels in the final bill.
“This was a good year for all of us. I believe that what we put in the budget reflects our shared values and a shared mission to reduce costs and make sure that the longer term stability of the state of New Jersey can be achieved,” Senate President Nicholas Scutari (D-Union) said at the press conference.
Sen. Bob Singer (R-Ocean) and Assemblyman Sean Kean (R-Ocean) were the only Republicans to back the spending bill. Both represent the 30th Legislative District, which is represented by two members of the GOP and one Republican.
Perhaps the largest spending reduction came from changes to Stay NJ, the property tax relief program that promises to halve senior citizens’ tax bills. The program’s overall costs will fall from $1.2 billion to $742 million due to lower income limits and award sizes for seniors with higher incomes.
Tax credits under the program could total $6,500 for those making no more than $100,000, $5,000 for filers with incomes up to $150,000, and $4,000 for individuals earning no more than $200,000. Under prior law, Stay NJ offered up to $6,500 in tax credits for seniors who made up to $500,000.
“I’m particularly pleased of where we ended up on Stay NJ. It’s something that we have worked on for a long time. It’s something that senior citizens really care about,” said Assembly Speaker Craig Coughlin (D-Middlesex), who championed the program. “It’s a myth that everybody’s leaving the state of New Jersey. The only group that is is senior citizens, and we’re making sure that they can rely on this going forward.”
A separate budget change will increase awards under New Jersey’s child tax credits by 25% at all levels, at the cost of $50 million in foregone revenue through the 2028 tax year. Those awards will range from $250 to $1,250 under the bill, depending on income.
The budget avoids new or heightened broad-based taxes, but it does limit two deductions used by businesses to write off losses and imposes a per-employee fee on businesses with at least 50 workers on Medicaid.
Most impactful is a bill limiting corporate business tax write-offs to $1 million until August 2030, while another limits or bars the use of the state’s alternative business calculation adjustment for some higher earners.
Together, the changes are expected to bring $750 million in revenue in the next fiscal year.
New Jersey’s governor said she wouldn’t raise taxes. This budget does. The governor said she would cut spending in this budget. In fact, the budget increases spending by $765 million.
– Assemblyman Mike Inganamort
Republicans viewed those changes as a broken promise given Sherrill said she did not intend to raise taxes while campaigning for governor last year.
“New Jersey’s governor said she wouldn’t raise taxes. This budget does. The governor said she would cut spending in this budget. In fact, the budget increases spending by $765 million,” said Assemblyman Mike Inganamort (R-Morris), a member of his chamber’s budget committee.
Legislative add-ons feature prominently inside and outside of this year’s budget. Though they are slimmer in number than in past years, spending added by budget resolutions sent more than $150 million to individual school districts, local governments, and other groups.
Such spending is sometimes derisively referred to as “pork” or “Christmas tree items” because they approve spending outside of the state’s normal competitive grant processes, though lawmakers tout the funding they secure as service to their constituents.
Among hundreds of other line items, funding added by budget resolutions this year includes $9 million for Camden County to acquire or demolish property, $1.6 million to underwrite North Bergen’s operating budget, and $1 million for park improvements in Carteret.
“We thought pork spending would come to an end, but the orgy of pork continues,” said Sen. Mike Testa (R-Cumberland), a budget committee member.
Separately, lawmakers added more than $290 million in district spending in a $358.8 million supplemental spending bill. On paper, that bill’s spending would occur in the current fiscal year, but its passage just hours before the budget deadline means at least some of the funds will be disbursed in the new fiscal year.
Largest among the supplemental’s line items is one setting aside $135 million for transitional aid to localities.
Almost all of that money, $105 million, is set aside for a low-interest loan meant to help Jersey City close a massive deficit in its budget. A $15 million grant in the budget proper is reserved for the same purpose.
The spending lawmakers added to the budget is supported mostly by a projected $267 million decline in Medicaid-related expenses.
