Credit: (John Mooney/NJ Spotlight News)

State lawmakers will soon find out whether what’s being described by many as a tough budget year will be interrupted by news of a revenue windfall bolstered by healthy April tax collections.

Later this week, state government’s top fiscal experts will appear before legislative budget committees to put forward updated revenue forecasts informed by the latest tax-collection data.

These forecasts, covering both the remainder of the current fiscal year and the fiscal year that begins July 1, are key factors in determining the state’s short-term and long-term financial trajectory.

If the tax-collection outlook is promising, that means there will likely be enough money to make new investments in things like public education, worker pensions and direct property-tax relief that Gov. Phil Murphy and lawmakers have prioritized in recent years.

But if things have taken a turn for the worse, that can mean last-minute budget cuts will be needed by June 30, when the current fiscal year closes. A potential scaling back of the spending ambitions for the upcoming fiscal year could also be in order if forecasters say economic turbulence is looming.

A revenue forecast released early last month by the nonpartisan Office of Legislative Services is helping to foster expectations for an April windfall that could put to rest any talk of near-term spending cuts.

In all, the OLS forecasters added more than $450 million to the Murphy’s administration latest revenue projection for the current fiscal year.

A revenue report released by the Department of the Treasury, in mid-April, also did nothing to dampen those hopes after it showed total monthly collections for March surged ahead of last year’s monthly totals by more than $550 million.

And that left total tax receipts for the first three quarters of the current fiscal year running more than $1.6 billion ahead of the prior year’s totals over the same period heading into the always-crucial month of April.

Amid these positive indicators, an official recap of the April collections will be provided by Treasury officials as part of the broader revenue update scheduled to be delivered to members of the Assembly Budget Committee on Wednesday.

Members of the Senate Budget and Appropriations Committee will also be briefed by Treasury officials on the latest revenue estimates during a meeting scheduled for Thursday.

Appearing before both committees on those days will also be the experts from the Office of Legislative Services, who will offer their own updated forecasts for the 2025 and 2026 fiscal years.

If the state did enjoy a stronger-than-expected spring tax-collection season, that could translate into an enhanced budget surplus at a time when lawmakers have linked the size of the surplus, at least on paper, to the rollout of an ambitious new property-tax relief program called Stay NJ that calls for enhancing benefits for thousands of senior homeowners starting in early 2026.

But having a strengthened surplus could also take on even more importance this year if substantial federal spending cuts up for discussion in the Republican Congress result in shifting of significant costs to state governments for programs like Medicaid and food assistance.

If enacted, these cuts could also come at the same time as a possible recession many economists indicate may come later this year as President Donald Trump pursues an aggressive, international trade war.

Meanwhile, in addition to easing the path to July 1 for Murphy and lawmakers, robust April collections could also indicate the state’s revenue base is growing at a healthy pace.

That would be especially good news for lawmakers at a time when Murphy, a second-term Democrat, has been calling for a series of tax hikes to help support a $58 billion budget he’s proposed for the fiscal year that begins July 1.

The proposed tax hikes, including higher levies on alcohol, cigarettes and marijuana, online gambling and online sports betting, as well as a broadening of the sales tax base, have not been widely embraced by lawmakers, including many members of Murphy’s own party who currently control both houses of the Legislature.

And at the same time Murphy has been pitching the tax hikes, his proposed budget for the 2026 fiscal year also calls for reduced year-over-year spending in numerous areas as part of a broader effort to narrow a gap between projected annual revenues and expenditures.

These proposed cuts would include state aid for county colleges and a cancer screening program that has a proven track record of catching early-stage cancer, including among those lacking insurance coverage.

These and other proposed cuts have drawn criticism from many lawmakers in recent weeks, with some suggesting they could be reversed once a final spending bill for the new fiscal year is introduced sometime next month.

However, if the concerns about a recession result in less optimistic forecast for the 2026 fiscal year, that could mean more cuts or tax hikes, or both, could be in the offing.

Under New Jersey’s Constitution, the governor proposes an annual spending plan and certifies the annual revenues, but it’s up to lawmakers to draft the annual spending bill before the start of each new fiscal year.

In the run up to this week’s budget committee meetings, top officials from the Murphy administration have been coming before the same panels to go over the individual departmental spending plans for the next fiscal year.

However, after this week, the budget-approval process will shift largely behind closed doors. This upcoming, cloistered phase of the process will end when lawmakers emerge sometime next month to introduce a spending bill that can pass both full houses of the Legislature — and also receive Murphy’s endorsement.

If lawmakers stick to past practice, millions of dollars in new spending will be inserted into the budget legislation before it is put up for final adoption in the run up to the July 1 deadline.

Typically, this new spending will reverse cuts proposed by the governor, and also fund other legislative priorities, including pet projects in individual districts that are often referred to as “Christmas-tree items” inside the State House.

Last year, such added spending totaled more than $600 million, covering everything from funding for soup kitchens and food banks to ballpark improvements and pedestrian safety projects.

While the executive branch’s individual departmental spending plans have received several weeks of oversight and close analysis by lawmakers, their own last-minute additions to the budget are often disclosed with little to no time at all for public scrutiny.

For example, last year the legislative additions weren’t disclosed until the final week before the deadline for adopting a new annual budget.

And disclosure of the individual sponsors of these legislative additions came weeks later – long after the budget legislation itself had been signed into law by Murphy.

This report is made possible in part by the Corporation for Public Broadcasting, a private corporation funded by the American people.