Credit: (pasja1000 via Pixabay)New Jersey is set to see a record state budget of nearly $60 billion as well as another year of tax increases on a range of items. Here’s a breakdown of that budget negotiated by Gov. Phil Murphy and Democrats who control the Legislature.
Fiscal year 2026 budget highlights
Total spending: The size of the state’s annual budget will swell to $58.8 billion under a legislative appropriations bill set to receive final approval from lawmakers Monday. If Gov. Phil Murphy signs the spending bill into law unchanged, it will hike annual spending by nearly 4% compared to the $56.7 billion annual budget he signed into law a year ago.
Tax hikes: To help pay for record annual spending, majority Democrats have in recent days advanced a raft of tax and fee increases along with the new annual budget. Although final estimates are not yet available, the tax hikes hitting smokers, gamblers and those selling high-dollar properties in New Jersey are expected to raise hundreds of millions in new revenue during the next fiscal year.
Legislative add-ons: This year, majority Democrats continued a practice of inserting new spending into the governor’s final draft of the proposed budget, which Murphy released in mid-May. The more than $400 million in new spending tacked on by lawmakers includes funding to reverse cuts proposed by Murphy, such as slashed operating aid for county colleges. But the majority Democrats also added more parochial line items, such as funding for a community center in Edison and a park in Perth Amboy.
Structural gap: A gap between planned annual spending and revenues that measured just over $1 billion in Murphy’s final draft of the fiscal year 2026 budget now totals nearly $1.5 billion due to the last-minute add-ons from lawmakers, according to figures included in a budget score sheet prepared by the nonpartisan Office of Legislative Services.
Budget reserves: As federal lawmakers consider slashing funding for social safety-net programs like Medicaid, billions of dollars in costs could be shifted to the states, putting increased pressure on New Jersey’s budget surplus, which will total roughly $6.7 billion at the close of the 2026 fiscal year, according to the score sheet.
