Another Unsustainable Budget Proposed by NJ’s Status Quo Governor: Record Spending; Higher Taxes

As we have said many times, Gov. Murphy is a status quo governor.  He was elected with the support of New Jersey’s powerful, taxpayer-funded government unions, especially its largest, the NJEA, which spent over $20 million supporting Murphy.  Murphy has repaid the favor by largely governing for their benefit.  The result is another unsustainable FY2026 budget proposed by Murphy, leaving many problems for his successors to clean up.

• Another record-high budget at $58.1 billion, up 2.7% from last year.  Over his two terms, Murphy has increased spending by 67% over Gov. Christie’s last budget of $34.7 billion. That’s an average increase of 8.4% every year for eight years.  That’s unsustainable.
• Full pension payment of $7.2 billion — or 12.4% of the entire budget — which is throwing good money after bad.  Ordinarily, full pension funding would be a strong positive, but due to decades of underfunding, New Jersey’s largest pension plan, the teachers’ plan (TPAF), remains severely underfunded and in need of reform. But Murphy refuses to do the hard work of reform and chooses to placate the NJEA.  Despite the $40 billion that Murphy has pumped into the pensions, TPAF was only 34.7%-funded at the beginning of FY2024 on a stand-alone basis, and only 47%-funded when the state lottery asset is added in.  Murphy has benefited from federal COVID aid and record tax revenues.  What happens when a recession hits?
• $1.2 billion in tax hikes. Last year it was raising the corporate tax rate to the highest in the nation, this year it’s on all sorts of goods and services as well as on high-end home sales. Remember that New Jersey already has the highest property taxes in the nation and that the Tax Foundation has ranked New Jersey 49th or 50th in the nation for business tax climate for every year of Murphy’s governorship.  That’s not sustainable.
• High and rising taxes are a major reason why New Jersey has one of the highest costs of living in the nation.  The FY2026 budget does fund property tax relief for seniors and some low-income residents, but these same people will see their savings in property taxes whittled away by higher costs of living.
• $1.2 billion budget deficit.  This means that Murphy’s highly touted rainy day fund has dwindled from $10 billion to $6.3 billion — during a time when New Jersey benefited from substantial revenue windfalls. Again, we ask what happens when a recession hits.

Once again, our status quo governor is leaving his state with an unsustainable budget: unsustainable spending, including unsustainable pension payments; a structural budget deficit and a dwindling rainy day fund; higher taxes and an even worse climate for businesses.  These all reflect Murphy’s doing the bidding of his government union pals.  Great for Murphy, who will be off chasing higher office with government union support; great for the government unions, who always and everywhere want more government spending and the higher taxes to pay for it; but terrible for the state.