In his final budget address, Governor Phil Murphy is proposing a $58.05 billion plan, with a strong emphasis on preserving funding for critical priorities while cutting spending on various programs. The address underscores the Administration’s commitment to economic security for all residents of New Jersey, continued infrastructure development, and improved educational outcomes. In the coming weeks, the Legislature will hold public hearings to review each department’s proposed budgets. The Legislature and Governor must enact a budget by the last day of the fiscal year, June 30, 2025.
Key Highlights of the FY2026 Budget:
Property Tax Relief & Tax Policy Changes
The Governor proposes a historic $3 billion allocation for direct property tax relief, benefiting homeowners and tenants. Tax policy changes also include hikes on the highest tier of realty transfer fees, sports betting, alcohol, adult-use marijuana, and cigarettes. A new exemption tax for small business investment is also included.
Education Investments
Education remains a top priority, with a total of $22.2 billion allocated for pre-K to 12 education. The school funding formula receives a $12.1 billion boost, marking a $4 billion increase since the FY2018 Appropriations Act. The budget also earmarks $1.3 billion for preschool education and $43 million for the NJ4S network, which serves nearly 500 schools.
Healthcare Initiatives
The budget continues to support healthcare affordability with more than $100 million allocated to the CoverAllKids program, providing free health insurance to tens of thousands of children. The Governor is also proposing $52 million for reproductive health planning services and $165 million for the CoverAllKids program. There is a focus on expanding the FamilyConnects NJ initiative to provide in-home visits for new parents.
Clean Energy & Environmental Initiatives
The Governor proposes a $274 million allocation to the Clean Energy Program, supporting New Jersey’s goal of 100% clean electricity by 2035. With electric vehicle adoption growing, there are now over 215,000 plug-in vehicles on the road as of this year. The Charge Up New Jersey program will continue to offer point-of-sale subsidies for new EVs, with $50 million in funding from the Clean Energy Fund. The budget also supports the Water Bank, funding over $1 billion for clean and drinking water projects.
Transportation & Infrastructure Investments
The budget proposes $2 billion for the State Transportation Capital Program, which includes critical investments in state, local highways, bridges, and NJ TRANSIT projects. In the past seven years, over 1,000 new buses were added to NJ TRANSIT’s fleet, and this budget will continue funding the modernization of the NJ TRANSIT system, including replacing outdated buses and rail cars.
Social Initiatives & Tax Relief
Governor Murphy is focusing on social programs, with $35.8 million for FamilyConnects NJ and new sales tax exemptions for baby supplies. The proposed budget also provides significant relief for seniors through the Stay NJ program and includes $61.2 million for PAAD and Senior Gold programs, benefiting New Jersey’s elderly and disabled populations.
Fiscal Responsibility & Surplus
The proposed budget maintains a $6.3 billion surplus, an increase from the $400 million when Governor Murphy first took office. This surplus intends to provide stability, protecting New Jersey against unforeseen economic challenges. The budget also includes a full payment into the state’s pension system for the fifth consecutive year.
Conclusion
A comprehensive budget document is expected in the coming weeks. Stay tuned for further updates and insights as more information becomes available. The text of the Governor’s budget address may be found here, and the Budget in Brief may be found here.