Gov. Sherrill’s first budget cut New Jersey’s projected deficit nearly in half, according to a new analysis from New Jersey Policy Perspective (NJPP). But much of that progress relies on temporary revenue, leaving harder decisions for next year’s budget.
The FY 2027 budget reforms the Stay NJ senior property tax program, limiting it to households with up to $200,000 in income and capping the largest benefits at $6,500 for those earning less than $100,000. The changes save the state $450 million a year, though the program still costs $742 million. Lawmakers closed the rest of the deficit by limiting how much large businesses can deduct in losses, while also expanding the Child Tax Credit for hundreds of thousands of families and increasing funding for legal services for immigrants facing detention and deportation.
But several of the budget’s revenue sources will shrink or disappear within a few years. A new fee on employers with Medicaid-enrolled workers is projected to raise $150 million this year, but only $23 million in FY 2028. A cap on corporate loss deductions expires after three years. Meanwhile, the state’s cash reserves continue to shrink.
“This budget shows the state is willing to make hard trade-offs, like reforming Stay NJ, instead of just delaying tough decisions,” said Brittany Holom-Trundy, NJPP’s Director of Research. “But leaning on temporary revenue only gets us so far. If lawmakers want to avoid a repeat of this same scramble next year, they need to find revenue that holds up over time, not one-time fixes.”
Without a real plan to raise revenue, the state will face the same shortfall with fewer easy options left next year.
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