There was a 450% increase in the number of private and nonprofit organizations receiving state funds over just two years, from 101 in FY 2024 to 462 in FY 2026 — helping to grow the secretive discretionary spending in that period to $2.1 billion, according to a report released late Monday by Garden State Initiative.
The report, released in advance of Gov. Mikie Sherrill’s initial budget address, highlighted how Trenton’s legislative earmarks are driving up costs for New Jersey families and businesses, while eroding transparency in state government.
The report, authored by New York University finance professor Thad Calabrese, said in Fiscal Year 2026 alone, the legislature added $860 million in earmarks, which is funding not requested by the governor and often approved behind closed doors.
These discretionary expenditures over the last few years, which equate to $240 per household, could otherwise fund a 4% across-the-board income tax cut, pay down 5% of the state’s massive bond debt, or even eliminate income taxes on those making $50,000 or less, the report said.
The report underscores that these spending practices reduce fiscal predictability, limit transparency, and hinder New Jersey’s business competitiveness.
The report calls for three key reforms:
- Eliminate non-competitive legislative add-ons.
- Redirect earmark funds toward broad-based tax relief or debt reduction.
- Require full transparency and public bidding for any grants to third-party organizations.
Sherrill has indicated tough decisions are coming.
GSI President Audrey Lane suggests this is a good place to start.
“There is a lot of talk about affordability these days, which is more pronounced with a $3 billion budget deficit this year,” she said. “One place for the governor to look, is to hold the line on last-minute discretionary spending.”
Lane said the $2.1 billion in politically connected spending without any standard review process needs to be addressed.
“What this report suggests is that the governor and the legislature can reform this earmark process to increase transparency of this spending well in advance of the budget deadlines to ensure it meets a public need in an objective way,” she said. “I look forward to hearing Gov. Sherrill’s budget address tomorrow — her acknowledgment of the structural deficit is welcomed and is the first step toward meaningful budget reform.”
