New Jersey Governor Phil Murphy is touting his administration’s 2026 budget proposal as affordable and secure. But, if you look any further, you will see the same troubling trend: ever-growing spending, higher taxes, and no real attempt to fix New Jersey’s structural deficit.
The budget clocks in at $58.1 billion, a 2.7% increase over FY2025. It also marks a 67% increase compared to the first budget passed under the Murphy administration. Despite promises of fiscal discipline, the state is once again spending more than it takes in, with a $1.2 billion structural deficit that is being papered over by one-time revenues and federal aid. Without permanent reform, this deficit will only worsen under the next administration. Analysts predict the surplus could be fully depleted as early as 2029. To avoid touching that surplus, Governor Murphy has a slew of tax hikes on the horizon in this year’s budget.
New Jersey already ranks near the bottom for business climate, affordability, and taxpayer outmigration. A sales tax increase will bring an additional $277 million burden to New Jerseyans, with areas such as digital services, interior design, and second-hand airplane sales all subject to a new 6.625% tax. A $20 million warehouse tax and $317 million increase in realty transfer fees leave pressure on housing costs and the state’s logistics industry. Another slap in the face for citizens will come via the New Jersey Transit System. Having previously raised fares by 15%, Murphy will raise fares again by 3% to fund maintenance and pensions. This latest increase comes despite the creation of a new tax on top-earning corporations, a measure intended to provide NJ Transit with a dedicated funding stream, reducing reliance on fare hikes in future budgets. Murphy must think it is the job of his state’s most successful businesses to pay for a poorly managed transportation system.
Rather than making difficult but necessary decisions, this budget is packed with giveaways and flashy programs. There’s $600 million for senior property tax rebates under the Stay NJ program, $10 million for expanded paid family leave for state workers, and even $1 million to fund lawsuits against the federal government. While important, there simply isn’t enough cash to go around for these initiatives, especially when the business community is left to suffer. The NJ Chamber of Commerce recommends taking just 5% of the $23.2 billion budgeted for school funding to promote investment and help small businesses. If the Governor and his administration won’t rein in spending, at least craft a proposal that focuses more on tomorrow than today.
Why is there no real effort to rein in spending or address the structural imbalance? Simple: it’s election season.
Governor Murphy may not be on the ballot, but his party is. A budget with generous provisions and protected by a beautiful surplus serves as a political tool to shore up support ahead of this fall. Instead of using this final opportunity for prudent fiscal reform, Murphy is choosing short-term popularity over long-term stability.
New Jersey taxpayers deserve better than budget theater.
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Author: Landon Epperson
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