Report

How Gov. Sherrill’s Fiscal Year 2027 Budget Measures Up

NJPP's research team evaluates whether the governor's first budget proposal advances economic, social, and racial justice.

By , , , ,

Published on Mar 11, 2026 in Tax and Budget

Before the Governor’s budget address for Fiscal Year 2027, New Jersey Policy Perspective produced a preview of the proposal, identifying key priorities to advance economic, social, and racial justice.

The report outlines three core priorities for the FY 2027 budget:

  • Guard fiscal responsibility, including reducing the multi-billion-dollar structural deficit and raising revenue from the wealthy.
  • Open the door to opportunity by protecting immigrants, expanding family tax credits, and improving health coverage.
  • Protect critical investments, including clean energy infrastructure and NJ Transit funding, to help make life more affordable in New Jersey.


With the release of the governor’s Budget in Brief, the budget met some key benchmarks but fell short elsewhere.

(All citations refer to the Fiscal Year 2027 Budget in Brief unless otherwise noted.)

NJPP FY27 Budget Priority

Was it included in the budget?

Maintaining cash reserves and reducing deficits  Yes. A structural deficit of $1.67 billion remains, substantially lower than original projections of more than $3 billion (BIB p. 8). The FY 2027 budget proposal recognizes the need for long-term solutions to close the structural deficit, including nearly $2 billion in proposed reductions in expenditures and $700 million in additional revenue (BIB pp. 4, 48, 50-53). Projected cash reserves will be reduced to $5.4 billion from $7.3 billion at the end of this fiscal year (BIB p. 8).
Fully funding pensions and schools  Yes. Governor Sherrill continues Governor Murphy’s commitment to fully funding the pension and school funding formulas (BIB pp. 15, 11). School funding changes include a six percent cap on funding increases, and a three percent cap on decreases (BIB p. 19).
Raising new revenues from the wealthy  Partially Included. Governor Sherrill’s budget includes new revenues from closing loopholes in corporate and business taxes (BIB pp. 48, 50-53). These increases are a good first step, but more revenue remains untapped from big corporations and wealthy individuals.
Adjusting Stay NJ to control costs  Yes. The budget proposal includes changes to Stay NJ that reduce the income cap from $500,000 to $250,000 and reduce the maximum benefit from $6,500 to $4,000, saving more than $500 million that would otherwise go to wealthier homeowners (BIB pp. 11, 59).
Services for immigrants  Partially included. The budget proposes continued funding for Cover All Kids, which provides health insurance for children regardless of immigration status (BIB p. 26). It also includes continued funding for language access, deportation defense, and the Office of New Americans.
Expanding and improving family tax credits  No. The Governor’s budget maintains the Child Tax Credit and Earned Income Tax Credit at current eligibility and benefit amounts (BIB p. 5).
Increasing the WorkFirst NJ grant  No. The budget proposal does not increase the grant amount for very-low income families receiving WorkFirst New Jersey, despite the amount being frozen for more than seven years of high inflation.
Expanding affordable insurance options  No. While current health care options are maintained, the budget includes no additional coverage programs or affordability support to address lost federal subsidies on the GetCovered NJ marketplace or residents who lose Medicaid coverage due to work requirements beginning in 2027 (BIB pp. 26-27).
Reducing or eliminating costs for people involved in the criminal legal system  No. The budget does not propose funding to reduce or eliminate the cost of prison communication fees, municipal public defenders, or other burdens placed on families as a result of the criminal legal system.
Preserving Clean Energy Fund and RGGI funding for clean energy infrastructure  No. The budget continues to raid the Clean Energy Fund at similar levels to the FY 2026 budget, diverting money for energy affordability and energy infrastructure towards both the general fund and filling NJ Transit budget holes (BIB pp. 74, 81). No information was provided about Regional Greenhouse Gas Initiative funding.
Maintaining the Corporate Transit Fee and committing it to transit  Partially included. The budget continues to dedicate the Corporate Transit Fee (CTF) to transit, and while it appears the state subsidy for NJ Transit has increased, this increase offsets a shortfall in CTF (BIB p. 40). The overall state budget allocation for NJ Transit remains at a low level, similar to previous years.

With only the Budget in Brief available at the moment, more detailed analysis will depend on the full budget details. Some programs mentioned in the budget address do not yet have specific revenues or spending items associated with them, such as the Governor’s proposed utility affordability initiative. Additionally, the proposed $2 billion in cuts may fall on communities or programs in need. More detail is needed to identify which programs will be affected.

The Governor’s budget provides an encouraging start toward a sustainable fiscal future. But spending cuts alone cannot protect residents or strengthen state investments that communities depend on. Building a stronger New Jersey will require stronger revenues, especially from asking wealthy individuals and large corporations to contribute more through a fair tax system. NJPP looks forward to a final Fiscal Year 2027 budget that better supports working families looking for opportunity, while ensuring the wealthy and powerful pay their fair share.

Authors

  • Tonanziht Aguas (toe-NAHN-see a-GOO-as) (she/her) is a Policy Analyst and State Policy Fellow at New Jersey Policy Perspective, where she focuses on economic security and conducts research to advance policies that strengthen stability for New Jersey families.

  • Alex Ambrose, Policy Analyst, researches policies with a focus on climate justice and transportation.

    Prior to NJPP, Alex served as Policy Associate at the Association of NJ Environmental Commissions (ANJEC) and Policy Assistant at New Jersey League of Conservation Voters (NJLCV). In those roles, she worked on policy and legislation to protect clean water, preserve open space, and reduce greenhouse gas emissions with an emphasis on equity. Most recently, she worked to pass plastic pollution legislation including the statewide single-use bag ban.

    Alex currently serves as the Chair of Clinton Township Environmental Commission and is pursuing her Master's in Public Administration at Rutgers University. She received her Bachelor of Science in Ecology, Evolution, and Natural Resources from Rutgers University with a minor in Environmental Geomatics.

    Email: ambrose@njpp.org |
    Follow Alex on Twitter

  • Peter Chen, Senior Policy Analyst, has worked on child and family policy advocacy in New Jersey since 2014. Most recently, he coordinated New Jersey’s nonprofit campaign for a complete count of the 2020 Census. Additionally, Peter has written reports on topics including: childhood lead poisoning prevention, chronic absenteeism from school, teacher certification, and summer meals.

    Prior to New Jersey Policy Perspective, Peter was Policy Counsel at Advocates for Children of New Jersey, where he also served as a Skadden Fellow from 2014-16. Peter received his JD from Yale Law School and his Bachelors of Arts from Indiana University-Bloomington. He served as a law clerk for Chief Justice Shirley Abrahamson of the Wisconsin Supreme Court.

  • Dr. Brittany L. Holom, Senior Policy Analyst, is a researcher and lecturer whose interests include health care system reform, the differential impact of health policies across socioeconomic groups, and the role of social and cultural factors in the access to and use of health care services, as well as health outcomes.
    Prior to joining NJPP in May 2020, Brittany taught classes on human security, health care systems, post-Soviet politics, human rights, and development at the Woodrow Wilson School of Public and International Affairs at Princeton University and in the Department of Political Science at The College of New Jersey. She also served as an AmeriCorps VISTA member at the Puerto Rican Action Board in New Brunswick and has recently volunteered at one of New Jersey’s COVID-19 testing sites as part of the Medical Reserve Corps.
    Brittany received her Ph.D. in Politics from Princeton University in 2018, where her dissertation explored healthcare reforms in the former Soviet countries and the impact of decision making at critical junctures on long-term institutional trajectories. She received her Master’s in Politics from Princeton in 2013 and her Bachelor of Arts in Russian Language and Literature and Political Science from the University of Notre Dame in 2011.
    Email: holom (at) njpp.org

  • Marleina Ubel, State Policy Fellow, has been a dedicated advocate for underrepresented groups throughout her academic career. She began her undergraduate work at Valencia College and earned a transfer scholarship to the University of North Carolina at Chapel Hill where she earned a B.A. in Philosophy. As a PIKSI fellow, she spent a summer at MIT challenging demographic disparities in institutions of higher learning. She is currently pursuing her M.S.W. in Management and Policy at Rutgers University. Her most recent research has focused on the negative impacts of public policy on low-income fathers. Marleina lives in Lambertville with her husband and daughter.
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