Record Budget and Key Features

Governor Phil Murphy signed a $56.6 billion state property tax budget for New Jersey, the highest state spending plan in history. The budget determines the allocation of taxpayer money for the fiscal year beginning July 1 and includes:

  • Revised tax increases for large companies.
  • Substantial investments in property tax relief.
  • Significant funding for public schools and pensions.

The spending plan is $758 million larger than Murphy’s initial proposal and $2.3 billion more than the current state budget signed last June. This budget reflects a concerted effort to address long-standing fiscal issues while providing immediate relief and support to New Jersey residents.

New Jersey Property Tax Relief

A prominent feature of the New Jersey budget is the allocation of approximately $27 billion for property tax relief. This allocation seeks to directly and indirectly ease the tax burden on New Jersey residents. Governor Murphy emphasized that nearly half of the budget is designed to provide this relief, a crucial aspect of the plan given the state’s high property taxes. The significant investment in property tax relief aims to support homeowners and make living in New Jersey more affordable for many families.

New Corporate Tax

The budget introduces a five-year, 2.5% “corporate transit fee” on companies with at least $10 million in earnings. This tax is expected to generate $1 billion annually and is dedicated to NJ Transit. The measure aims to address a $766 million financial shortfall faced by the state’s bus and rail agency. While progressive advocates have praised this move, business groups, including the New Jersey Chamber of Commerce and the New Jersey Business and Industry Association, have expressed concerns. They believe that this tax will make New Jersey’s business taxes the highest in the nation and potentially drive away job-creating companies.

Pension and School Funding

Significant portions of the New Jersey property tax budget are allocated to public schools and pensions, continuing efforts to rectify decades of underfunding in these areas. Governor Murphy highlighted these investments as essential for ensuring the long-term stability and growth of the state’s economy and public services. The budget’s focus on education and pensions addresses historical financial mismanagement and provides a more secure future for public employees and students. The budget involves spending $2.1 billion more than it collects, relying on the state’s $6.16 billion surplus fund. This aspect of the budget has drawn criticism, particularly from Republicans who argue that it could pose financial risks. They have voiced concerns about the sustainability of deficit spending and the potential consequences of depleting the surplus fund.

New Jersey Legislative Approval

The New Jersey property tax budget was approved following extensive negotiations and a typically hectic final week of June. The state Senate and Assembly passed the budget along party lines, with some bipartisan support. The approval process involved public hearings and negotiations with Democratic leaders in the Legislature to finalize the budget. While the process received some criticism for being rushed and lacking transparency, the ultimate goal was to ensure that a comprehensive and practical budget was in place by the start of the new fiscal year.

Key Takeaways

  • Record Spending: The budget sets a new record for New Jersey state spending at $56.6 billion.
  • Property Tax Relief: $27 billion is allocated to ease the property tax burden on residents.
  • Corporate Tax Hike: A new 2.5% tax on large companies is aimed at funding NJ Transit.
  • Deficit Spending: The budget uses the state’s surplus fund to spend $2.1 billion more than it collects.
  • Investment in Public Services: Significant funding is allocated for public schools and pensions to address long-term underfunding.