Governor Mikie Sherrill unveiled her first state budget proposal to the Legislature on Tuesday, laying out a $60.7 billion spending plan for Fiscal Year 2027. Under the theme “Rising to the Mission: A More Affordable and Accountable New Jersey,” the proposal represents a 3.2% increase over the signed FY26 budget.
While the administration highlighted record-breaking investments in education and property tax relief, the New Jersey Business & Industry Association (NJBIA) is raising alarms over three specific revenue-raising measures totaling $750 million that target the state’s employers.
Christopher Emigholz, NJBIA chief government affairs officer released his annual State Budget at First Glance synopsis for FY27 and the details that are most important to New Jersey businesses and the economy.
The proposed budget arrives as the state grapples with a structural deficit. While early projections placed the gap at $3 billion, the administration’s proposal narrowed that to $1.7 billion through a series of spending cuts and new revenue streams.
The budget allocates significant capital toward long-term obligations and social infrastructure:
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Pensions: A record $7.3 billion payment, marking the sixth consecutive year the state has met 100% of its actuarially determined contribution.
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Education: K-12 formula aid is slated to hit $12.4 billion, the highest in state history.
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NJ TRANSIT: The agency would receive more than $1 billion in support, including a $215 million increase in the General Fund subsidy to offset lower Corporate Transit Fee (CTF) revenues.
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Health Benefits: State health benefit payments are expected to reach $7.6 billion, a staggering 84% increase over the last decade.
Emigholz noted that while the business community supports the governor’s efforts to curb spending through approximately $2 billion in cuts, three new revenue “solutions” are causing friction:
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NOL Cap ($485M): A temporary $1 million cap on Net Operating Loss (NOL) deductions for tax years 2026–2028, impacting roughly 600 taxpayers.
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Employer Healthcare Contribution ($145M): A graduated assessment (ranging from $325 to $725 per employee) on companies with 50+ employees who are enrolled in NJ FamilyCare.
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ABC Adjustment ($120M): Changes to the Alternative Business Calculation that will eliminate deductions for pass-through taxpayers with gross income above $1 million.
“NJBIA looks forward to working with the Sherrill administration and the State Legislature to remove or moderate these three revenue raisers,” Emigholz said, adding that the goal remains to sunset the Corporate Transit Fee on its two-year statutory schedule.
Despite the tax concerns, the budget includes several “pro-growth” line items aimed at modernizing state operations:
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Innovation: $13.3 million for the New Jersey Innovation Authority to support a new Permitting Dashboard.
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Efficiency: Funding for additional staff at the DEP to expedite energy and housing permits, and $3 million to upgrade the Division of Consumer Affairs licensing system.
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Workforce: Increased funding for high-impact tutoring and the Summer Youth Work Experience Program.
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Procurement: $500,000 dedicated to helping minority- and women-owned businesses navigate state procurement following a 2024 disparity study.
To rein in spending, the governor proposed scaling back the Stay NJ property tax relief program. The proposal lowers the income eligibility cap from $500,000 to $250,000 and reduces the maximum benefit from $6,500 to $4,000. Additionally, the budget eliminates over $600 million in previous legislative “add-ons”—local projects that were often not competitively awarded.
As the budget process moves to the Treasury and Legislative committees, the business community remains focused on ensuring that “accountability” doesn’t come solely at the expense of New Jersey’s employer base.
