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 FY2025 budget is no exception.

• Another record-high budget at $56.6 billion — a 63% increase from Gov. Christie’s last budget of $34.7 billion over a period of seven years.  That’s a 9% increase in spending every year for seven years.  That’s unsustainable.
• Full pension payment of $7.2 billion — or 12.7% 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 was able to make these large payments due to federal COVID aid and record tax revenues.  What happens when a recession hits?
• More than $1 billion in tax hikes, including an additional 2.5% tax on businesses making $10 million in profits. That returns New Jersey’s top corporate tax rate to 11.5%, the highest in the nation. By way of comparison, the tax rates of the neighboring states with which New Jersey competes for businesses and jobs: PA 8.49%, DE 8.7%, NY 7.25%.  Remember that the Tax Foundation ranked New Jersey dead last in the nation for business tax climate for every year of Murphy’s governorship. PA was 31st and DE was 21st.  New Jersey is bad and getting worse.
• High and rising taxes are a major reason why New Jersey has one of the highest costs of living in the nation.  The FY2025 budget does fund property tax relief for seniors, but these same seniors will see their savings in property taxes whittled away by higher costs of living.
• Large budget deficit. As NJSpotlight News described it, a “wide structural deficit,” where spending exceeds revenue collections by over $2.1 billion.  This means that Murphy’s highly touted rainy day fund has dwindled from $10 billion to $6.1 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 large 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.