Gov. Mikie Sherrill announced Thursday that her first budget process will be far more transparent than previous ones, will contain far more cuts in spending — and will include no tax increases.
Sherrill, appearing with State Treasurer Aaron Binder at a specifically called media event, said she is ready and willing to work closely with the Legislature on the budget. But she warned that the spending plan she will introduce on March 10 will require significant cuts.
Sherill said she has no choice.
“I refuse to put off for tomorrow what we have to fix today,” she said.
Sherrill said Washington “isn’t coming to save us” and that federal cuts — including those resulting from Trump-era legislation — will place even more pressure on the state budget.
She was equally blunt about what she will not do.
“To be clear, we’re not going to raise taxes on New Jerseyans,” she said. “We are going to look for savings.”
Sherrill said she and her team have spent weeks meeting with cabinet officials, legislative leaders and Treasurer Binder to assess the state’s finances heading into the next fiscal year. The conclusion, she said, is unavoidable. Without intervention, New Jersey’s $7.2 billion surplus will be wiped out within two years, and the state could fall $750 million into the red by FY2028.
Binder reinforced the urgency, noting that projected growth in major programs — including Medicaid, school aid and public employee benefits — is accelerating the long-term imbalance. He also highlighted the budgetary burden imposed by decades of missed pension payments and the looming loss of remaining federal relief funds, saying many previous one-time fixes “are not available to us anymore.”
Sherrill said her administration is committed to fiscally responsible budgeting and a more transparent process, including a new public budget-tracking tool launching in April. But she stressed that the tough decisions ahead are unavoidable.
“Every choice of spending has an equal and opposite choice of cuts,” she said.
Here are five key things we learned
1. The surplus will vanish within two years without major action
Both Sherrill and Binder emphasized that the state’s $7.2 billion surplus is projected to be fully depleted by FY2027. Binder said it was important for the public to understand that the state is projected to entirely deplete the surplus in just two years.
2. The structural deficit is roughly $3 billion and growing
Sherrill said New Jersey is staring down an estimated $3 billion structural deficit, driven by rising costs, federal funding cuts and long-standing pension liabilities. Binder added that many of the hardest federal cuts won’t hit until later in 2027.
3. No tax increases are planned — cuts and savings are
Sherrill said every cabinet department has been asked to identify savings and that programs not showing results will be reviewed closely.
4. Past pension underfunding continues to heavily burden the budget
Binder noted that next year’s full pension payment will exceed $7 billion — a number that would be a little over $1 billion if prior administrations had paid in. Sherrill contrasted this with New York, which “runs a larger pension system” but pays $1.5 billion annually. (To be clear: The Murphy administration made full pension payments in its last five budgets.)
5. A public budget transparency tool will launch in April
Sherrill said the new budget-tracking platform will allow residents to follow state spending through a New Jersey report card. She framed it as part of her commitment to a more transparent and accountable government.
Two things we still don’t know
1. Where the cuts will come from?
Sherrill said all programs will be scrutinized but offered no specifics, saying they will be announced on March 10.
2. Will she follow through?
Many governors have promised tough cuts before. It remains to be seen how aggressively she will pursue them — though her tone Thursday suggested little wiggle room.
Two things we knew we’d hear (business groups loved it)
NJBIA Chief Government Affairs Officer Christopher Emigholz:
“NJBIA and New Jersey’s business community strongly support the Sherrill administration’s message of fiscal discipline delivered today. The Governor’s focus on responsible long-term budgeting, finding efficiencies and righting our fiscal ship without relying on more tax increases in an already overtaxed state is very welcome, appreciated and a necessary breath of fresh air for New Jersey taxpayers.”
New Jersey State Chamber CEO Tom Bracken:
“The New Jersey Chamber of Commerce appreciates the Sherrill Administration’s openness, transparency and straightforward approach in communicating today about the state’s fiscal challenges as the governor’s new team prepares its inaugural state budget. We also appreciate the clear acknowledgment that addressing this situation will require difficult but necessary decisions, including cutting expenses.”
