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NJ Budget Message
On February 27th, Governor Phil Murphy delivered his seventh budget address, outlining his spending plan for FY25, to a joint session of the New Jersey State Senate and General Assembly. The $55.9 billion budget proposal includes a surplus of $6.1 billion to address potential economic uncertainties.
Governor Murphy highlighted his proposed budget focused on lowering costs and increasing opportunities for working and middle-class families and providing tax relief, including expanding the ANCHOR property tax relief program, increasing funding over $900 million for public schools to fund the state's school funding formula fully, and to provide dedicated funding for NJ Transit.
The proposed budget was not without controversy, as the spending plan includes a new Corporate Transit Fee to help fill the upcoming deficit in NJ Transit. The proposed 2.5 percent tax would apply to corporations with income over $10 million, but the levy would return to the first dollar earned. Once implemented, the fee would retroactively apply to income starting on January 1st of this year.
The administration estimates the new fee will raise a little more than $1 billion in the 2025 fiscal year and about $826 million in FY26. This new fee replaces the Corporation Business Tax surcharge, which sunset in December, that charged an additional 2.5 percent on companies with incomes over $1 million. NJ Transit fares are planned to increase by 15 percent also to help fill some of the deficit in the agency.
The FY25 budget includes several "revenue raisers", such as the Corporate Transit Fee. Other increases proposed are a phase-out of a sales tax exemption on zero-emission vehicles, a warehouse fee on truck drop-offs, fees on broker-dealers, assessments on Health Maintenance Organizations, and fees on firearms.
Governor Murphy said he plans to follow through with a promised $200 million installment to fund the senior property tax relief program StayNJ. Under the current fiscal year, $100 million has already been allocated to the program, though benefits are scheduled to go out at the earliest start of 2026.
Murphy's proposal would drop the total charity care pool — which helps cover the cost of care for uninsured residents — for hospitals from $342 million to $137 million. However, the cut in charity care funds would be rerouted to a new Medicaid outpatient hospital supplemental state-directed payment. The proposal includes funding for primary care loan redemption and continued funds for psychiatric resident slots.
We expect more details to be available once the official FY25 Budget Book is released to the public, usually two weeks after the budget address. Governor Murphy must sign the budget into law before the July 1st constitutional deadline. The budget address was the official start of budget season, where the Legislature is tasked with reviewing and revising the Governor's proposed plan. Over the next several weeks, the Legislature will hold budget hearings to review and tweak respective aspects of the proposed budget.
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