New Jersey lawmakers pass $58.8 billion budget

By NIKITA BIRYUKOV
Republished with permission of N.J. Monitor

New Jersey lawmakers approved a $58.8 billion spending bill in votes that largely fell along party lines just hours before a deadline that would have sent the state government into a shutdown.

The budget maintains a full pension payment and promises to send more than $12 billion to aid the state’s K-12 schools, but it dips into state reserves to support a structural deficit that has expanded above the levels Gov. Phil Murphy pitched in February.

“What does this budget include? It includes record amounts of property tax relief. It includes fully funding the pension payment for the fifth year in a row, fully funding the school funding formula,” said Sen. Paul Sarlo, the chamber’s budget chairman.

The Senate approved the bill in a 26-13 vote, while the Assembly approved it in a 52-27 vote with one abstention. Murphy’s office announced at 12:06 a.m. Tuesday that he had signed it.

Democratic lawmakers praised the bill for its reversals of some cuts proposed by Murphy.

“I think the budget came out pretty well. There’s a tremendous amount of spending on really important things,” said Senate President Nicholas Scutari (D-Union)

The plan includes a $6.7 billion surplus the state is forecasted to maintain at the end of the fiscal year that begins July 1. While reduced from the record levels seen in recent years — the state’s reserves pushed to above $10 billion in fiscal year 2024 but have since been reduced by deficit spending — the surplus is still among the largest in state history.

The budget will continue to run a structural deficit. Spending levels in the bill exceed revenue — including from one-shot sources that cannot or will not recur in the fiscal year that begins in July 2026 — by $1.5 billion, down from $2.1 billion the prior year but up from the $1.2 billion Murphy proposed in February.

Republican members criticized the spending bill’s size and breakneck passage. Those misgivings have become something of a yearly exercise for GOP lawmakers who have seen the budget swell from the $35.5 billion approved in Chris Christie’s final year as governor.

“The truth about the budget is that it continues us on an unsustainable path. The budget does not make New Jersey more affordable. We are once again spending too much,” said Assemblywoman Nancy Munoz (R-Union), the chamber’s GOP budget officer.

Much of those increases can be attributed to heightened pension payments and school aid, which have risen by nearly $8.8 billion under Murphy.

“We can all agree this budget spends more than Gov. Murphy’s budget in 2018. But why? Let’s talk about where the budget growth has been focused. The top six drivers in spending growth are the following: the pension payment, school funding, direct property tax relief, Medicaid health benefits, and programs for the developmentally disabled,” said Assemblywoman Eliana Pintor Marin (D-Essex), the chamber’s budget chair.

    Assembly Speaker Craig Coughlin on the Assembly floor on June 30, 2025. (Dana DiFilippo | New Jersey Monitor)
  

The budget includes payments under Stay NJ, a property tax relief program that promises to halve seniors’ property tax bills, to a cap of $6,500. Stay NJ will pay a half-year’s benefit in the fiscal year that begins July 1.

Republicans also derided new taxes both chambers approved Monday. Those include higher fees on the sale of properties worth more than $2 million, casinos’ online wagering wins, cigarettes, and electronic cigarette fluid.

The budget has faced criticism from other corners, including from high-ranking members of the administration. Acting State Comptroller Kevin Walsh railed against a provision that bars officials from blocking Medicaid payments to low-performing nursing homes.

“If the budget passes without changes, the Legislature will be on the side of bad nursing homes that harm New Jersey’s most vulnerable residents — without even giving the public a chance to weigh in,” Walsh warned on social media Sunday.

Attorney General Matt Platkin criticized provisions that divert $45 million in opioid settlement money to the state’s general fund, arguing those dollars were meant to fund addiction treatment and not be used to support overall state spending.

Others took aim at diversions from the state’s Clean Energy Fund. NJ Transit is set to receive $140.1 million in clean energy money in the coming July-to-June fiscal year, and the budget pulls an additional $50 million of its dollars into the general fund.

The diversions have irked progressive and environmental groups that charge money from the fund should be used for renewable energy projects. They said pulling its funds into the state budget could delay generation capacity that could push down spiking electricity prices.

“The public is being told we’re making progress in making our state’s energy system more affordable and reliable, but the budget tells a very different story,” said Anjuli Ramos-Busot, director of the New Jersey Sierra Club. “We urge lawmakers to reverse this raid and deliver a budget that invests in the future, not robs from it.”

Antoinette Miles, state director for the New Jersey Working Families Party, said the spending bill does too little to insulate New Jersey from expected federal cuts that could deprive it of between $2.5 and $5 billion in federal Medicaid dollars. The budget, she said, “fails to meet the moment.”

Business groups welcomed some parts of the budget — like sales tax exemptions for baby items like cribs and tax credits for manufacturers — they chiefly worried it would make New Jersey businesses less competitive.