Report

How the Governor’s Fiscal Year 2026 Budget Measures Up

NJPP's research team evaluates whether Governor Murphy's final budget proposal sufficiently advances economic, social, and racial justice.

By , , ,

Published on Mar 5, 2025 in Tax and Budget

Before the Governor’s budget address for Fiscal Year 2026, New Jersey Policy Perspective produced a preview to evaluate whether the budget sufficiently advances economic, social, and racial justice.

With the release of the Governor’s budget in brief, the Governor’s budget met some important key benchmarks but fell short in other areas. (All citations refer to the Fiscal Year 2026 Budget in Brief unless otherwise noted.)

Below is a short summary of how the governor’s budget measured up.

NJPP FY26 Budget Priority

Was it included in the Governor’s Budget?

Protect the surplus and close the deficit  Yes. The projected annual budget shortfall has been reduced from $2.1 billion in the FY 2025 budget bill to $1.2 billion through some tax increases and budget cuts (BIB p. 8). The surplus remains essentially flat at $6.3 billion, although this amount is potentially too small to withstand looming federal cuts to critical programs such as Medicaid or other state-federal partnerships (BIB p. 8).
Fully fund pensions
and schools		  Yes. The governor continued his commitment to fully funding pensions and the K-12 school funding formula (BIB pp. 10, 15-16).
Raise revenues to balance
the budget		  Partially Included. The governor’s budget raises roughly $1 billion in new revenues, including more than $300 million from a new real estate assessment levied on property sales over $1 million (BIB pp. 53, 58). However, the budget still draws on the surplus to balance the books.
Maintain StayNJ’s guardrails, specifically the original spending rules that require a healthy budget surplus  No. StayNJ, an expensive subsidy program disproportionately benefiting wealthy senior homeowners, requires a 12 percent surplus target before payments can go out. Nonetheless, this budget continues to fund StayNJ and assumes payments will go out in 2026, even though the surplus is only 10.9 percent (BIB pp. 13, 8).
Maintain funding for services for immigrants  Yes. Thankfully, the proposal preserves funding levels for programs such as Cover All Kids, which provides health insurance for children regardless of immigration status, and legal services for immigrant adults and children (BIB pp. 27, 31). The proposal also doubles funding for the Office of New Americans, which connects immigrants to services for which they or their families may be eligible (BIB p. 31).
Expand and improve
tax credits for working
families		  No. Unfortunately, the governor’s budget included no expansion of the Child Tax Credit or Earned Income Tax Credit to assist working families in affording the increasing cost of living in the state.
Increase benefits in WorkFirst NJ to reduce poverty  No. Similarly, there was no expansion of the benefit amount for WorkFirst NJ, which provides cash assistance to low-income households.
Expand affordable health insurance options  Partially Included. As noted above, the budget continued to fund Cover All Kids, dedicating $165 million to the program to keep pace with enrollment. However, there were no other proposals to expand access or eligibility to state-funded health insurance programs.
Keep the Corporate Transit
Fee funding transit		  Yes. Corporate Transit Fee funds were directed only to New Jersey Transit and not to the general fund or footing the bill for other programs (BIB p. 6).
Use the Clean Energy Fund
only for clean energy projects		  No. The raid on the Clean Energy Fund remained similar to prior years, with $70 million going from the Clean Energy Fund to pay for basic New Jersey Transit maintenance (BIB p. 88).
End predatory prison communication fees  No. The budget did not include any funding to reduce or eliminate the cost of prison communication fees, leaving families to foot the $15 million bill for communicating with their loved ones who are incarcerated.

With budget negotiations ahead, lawmakers must prioritize solutions that center the experiences of working- and middle-class New Jerseyans by strengthening economic security, protecting public services, and ensuring long-term fiscal stability. NJPP has released a full report outlining additional progressive revenue solutions that would reduce the need for budget cuts that will hurt working-class families, reduce the need to raid other funds to balance the books, and better insulate New Jersey from looming federal budget cuts.

To learn more about policy solutions that NJPP recommends to build a more equitable state, read Blueprint for a Strong and Resilient New Jersey.

Authors

  • 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.

  • 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
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