New Jersey lawmakers moved the state’s $60.74 billion fiscal year 2027 budget forward late Sunday night — just in time for it to have the required 24-hour waiting period that will enable both the State Senate and the General Assembly to pass it on Tuesday before Gov. Mikie Sherrill signs it into law.
While the budget essentially retains the $60.7 billion that Sherrill proposed in March, the budget still spends nearly $1.4 billion more than it takes in. However, that structural gap is down from the $3 billion figure last year.
The Assembly and Senate budget committees also approved a supplemental spending bill for nearly $360 million in additional spending for the current fiscal year on Sunday — these are the so-called extras the governor had vowed to limit (as all governors do before relenting a bit at the finish line).
For the business community, the budget bill maintained three “revenue-raisers” — which is nice way of saying “tax hikes.”
The good news, each one was mitigated.
Here’s a quick early look, with thoughts from the New Jersey Business & Industry Association:
Medicaid tax: Sherrill’s proposal to penalize employers with 50 or more workers on Medicaid stayed in the budget, although it was amended to exempt part-time workers, seasonal workers, per diem workers, new workers and disabled workers.
“While compromises were made on the per-employee fee on businesses with more than 50 employees using Medicaid, many of our job creators will be penalized for something which they have little to no control over,” NJBIA CEO Michele Siekerka said. “And, yes, workers on Medicaid will still be impacted.”
Temporary NOL cap for corporate taxpayers: The governor’s FY27 budget plan also proposed a temporary $1 million cap on all net operating loss (known as NOL) deductions under the corporation business tax from tax year 2026 through tax year 2028.
NJBIA Chief Government Affairs Officer Chris Emigholz was able to get language added that extended the 20-year carry forward under the NOL law by three years after that pause to preserve as much tax planning ability as possible.
Still, Emigholz cautioned during testimony on Sunday that New Jersey will be seen as less competitive than other states when corporations are using tax planning strategies to determine their locations.
ABC deduction for pass-through taxpayers: The proposed elimination of alternative business calculation (known as the ABC deduction) for pass-thru businesses with income of $1 million was updated in the final budget to specify that it was for net income, not gross income.
