As expected, the governor and the Legislature hammered out a budget for fiscal year 2026 late Friday. The record $58.8 billion budget, which was approved in committees, is expected to be passed by both houses and signed by Gov. Phil Murphy today — meeting the constitutionally-mandated June 30 deadline.
As expected, the budget has gone up — it was $55.9 billion a year ago. And it was produced with a lot of talk but not so much transparency.
It also was rushed. The final committee vote in the General Assembly was at 11:17 p.m. Friday — or just a few hours after the full document was formally introduced.
We offer a few thoughts in a (hopefully) easy-to-read (and entertaining) Q-and-A format:
Q: In February, Murphy said he wanted to remove all one-time appropriations and drastically limit (if not eliminate) discretionary and non-competitive grants. Did that happen?
A: Of course not. It sounded good, but it was never a realistic option. The budget is about $700 million more than Murphy pitched in his budget address that same month.
Q: But at least the budget is balanced – that is, it takes in as much money as the state is set to spend?
A: LOL. Nope. It appears the budget has a deficit of about $1.5 billion – though it is expected to have a surplus of $6.3 billion should revenues fall short of spending.
Q: OK, all politicians love to talk about how they lowered taxes. Did they?
A: Depends on how you look at it. There’s money for the ANCHOR property tax relief program (which gives approximately 2 million homeowners and renters a $700 rebate). And Stay NJ, a property tax relief program for people over 65 (with incomes under $500,000) that everyone likes but no one knows how to pay for, was included at a cost of $280 million.
Q: Tax hikes: Guessing there are some of them. What’s coming?
A: Well, it’s bad news if you are a smoker (as if the inevitable health consequences and stinky clothes aren’t enough). There will be a 30-cent hike on cigarettes, bringing the tax up to $3 a pack – and the tax on vaping products will jump from 10 cents to 30 cents. Combined, it is believed the increases will raise an additional $50 million.
Q: We’re betting there are a few others.
A: Shameless transition pun aside, there are. Casinos will now pay a 19.75% tax on sports betting and internet gaming — up from the 13% and 15% they currently pay. You can call it a win for the house (Murphy wanted to raise both to 25%) but it actually comes at some risk.
This industry was a revenue gift for the state — as N.J. was best prepared when sports betting was stunningly allowed a few years back. The state needs to be careful. The state had two huge inherent advantages: casino-friendly regulations due to the existing industries and low tax rates. Taking one of those away will make it easier for other states to lure their headquarters away.
Q: Was there anything positive for business?
A: Sure. There was money put back in for community colleges ($20 million), which remains the state’s biggest workforce development program. And there was a decision not to implement a “Buck a Truck” excise fee on warehouses, which is the least that could be done for a logistics/ecommerce/warehouse sector that has saved the state the past decade.
Q: Both of those will encourage people to stay. Was there anything that will make people leave?
A: That remains to be seen, but this much is clear: It will be harder to do so — especially if you’re rich. Here are budget increases on sales of homes over $2 million:
- 2% increase: Homes that go for more than $2 million but less than $2.5 million;
- 2.5% increase: Homes that go for between $2.5 million and $3 million;
- 3% increase: Homes that go for between $3 million and $3.5 million;
- 3.5% increase: For homes going for $3.5 million and above.
Q: That’s tough, please tell me there is something in the budget so everyone can have some fun?
A: Indeed, there is. A Murphy proposal to tax bowling alleys, mini golf, baseball batting cages and other recreational sports activities was dropped.
Q: Well, that’s something to rally around?
A: Yup. We can see the new slogan now: “If you want to bowl tax free, then New Jersey is the place for thee.”
We’ll be expecting a mass influx from the Midwest at any moment.
