New Jersey Gov. Phil Murphy signed a $58.78 billion budget for Fiscal Year 2026, which includes a historic record-setting $6.7 billion surplus. The budget salvaged property tax relief for homeowners and renters and provides the highest level of school funding in history. The budget also makes a full pension payment and provides financing to modernize NJ TRANSIT’s fleet.
“This budget exemplifies our dedication to fiscal responsibility, affordability, and opportunity for all New Jerseyans,” Murphy said. “Over nearly eight years in office, we have maintained a steadfast commitment to building a stronger and fairer New Jersey and righting our fiscal ship. I’m proud that this budget caps off an eight-year journey to turn our state around and delivers greater economic security and opportunity to every family.”
Murphy touts the nearly 16-time increase in the surplus from when he came into office eight years ago, pointing out that Gov. Chris Christie left him with a $409 million surplus. Murphy has termed out, paving the way for a new governor next year.
Sen. Paul Sarlo, the longest-serving chair of the Senate Budget and Appropriations Committee, highlighted the $6.7 billion surplus as providing a cushion for the next governor. He also pointed out the $1.47 billion structural deficit as an improvement over the $8 billion deficit under Christie.
The budget imposes increased taxes on vapes and cigarettes, online gambling and sports wagers, and high-value homes. Gone from the budget is the “fun tax” which would have imposed taxes on recreational activities such as bowling and golf.
The budget was not without criticism, however, as public workers called on legislators to address the 30% increase in health care costs. The budget trimmed $100 million in the State Health Benefits Plan, prompting outrage by unions that pointed out state workers are facing a fourth straight year of double digit increases in health care costs. Following the vote, however, Speaker Craig Coughlin opened the door to restoring that amount upon learning that the state received $200 million in unanticipated revenue. Coughlin pledged to hold hearings on the issue.
The budget drew criticism from Murphy’s own cabinet. The budget includes language to override regulations that withhold Medicaid payments to poor performing nursing homes, drawing criticism from Acting State Comptroller Kevin Walsh and Sen. Joseph Vitale. The budget also redirects $500 million in opioid settlement funds to hospital systems contrary to the Opioid Recovery and Remediation Advisory Council’s recommendations to invest the money in evidence-driven, community-based programs such as temporary housing and harm reduction treatment strategies. Attorney General Matt Platkin criticized the diversion of the settlement funds to hospital systems with no specification on how those funds are to be used.
As the race for governor heats up, the Legislature will turn its attention to priorities in the lame duck session at the end of this year, which tops off the end of a two-year legislative session and the last few months of Murphy’s term.