Governor Murphy signed the Fiscal Year 2026 Appropriations Act today, approving funding levels for the next twelve months, but the state still faces a financial cliff. The approved budget includes modest revenue increases, though not enough to cover the full cost of the state’s spending. This leaves the state with a nearly $1.5 billion gap that must be filled from its cash reserves, which have dwindled to $6.7 billion. Cash reserves that once provided a safety net now cover barely one month of operations.
Making matters worse, the state faces additional funding threats from federal actions. With New Jersey receiving nearly $30.8 billion in federal funds in fiscal year 2024, Congress’s expected vote on massive cuts to Medicaid and food assistance programs could devastate both the state’s finances and the hundreds of thousands of residents who depend on these services.
In response, NJPP issues the following statement.
Nicole Rodriguez, President, NJPP:
“Over the past seven years, Governor Murphy has taken great steps to put the state back on strong financial footing. He achieved full funding of the school funding formula and the state’s pension payments, restored the state’s credit ratings, and refilled the state’s cash reserves to protect against unexpected economic downturns. But this legacy is now at risk, with potentially catastrophic federal cuts to Medicaid and food assistance being approved by Congress and a state budget that still does not raise enough revenue to cover its expenses.
“The Governor and the legislature have worked to ensure that the budget reflects new revenue sources focused on the wealthy and powerful. With the addition of critical revenue sources such as the millionaire’s tax on households with income over $1 million, the corporate transit fee on big businesses, and now an expanded realty transfer fee on property sales over $2 million — each an NJPP priority — the state’s leaders have raised revenues to help fund the critical programs that make New Jersey a great place to raise a family or start a business.
“Unfortunately, more needs to be done to protect the state from the economic challenges ahead. With New Jersey receiving nearly $30.8 billion in the last fiscal year, cuts from Washington will create a devastating double impact — harming the state’s finances while directly hurting New Jersey residents by kicking them off health insurance or denying them access to food. New Jersey can and should show the way forward for the country by ensuring that its residents are protected from these harmful federal actions. But to do so, the state will need more revenue and bold action to ensure that the state’s dollars go to help those who need it most. Simply transferring money from other accounts for one-year fixes does not provide the base for long-term investments that the state needs.
“This budget’s legacy depends on what happens in Washington. It represents a missed opportunity for the state to take bold, decisive action to protect its residents by raising revenue ahead of time to limit the damage of federal cuts. New Jersey’s leaders must act quickly to protect residents from the financial storm ahead.”
###
