Governor Mikie Sherrill’s first budget proposal increases state spending by nearly $2 billion compared to the final budget under former Gov. Phil Murphy.
Trenton, NJ – Governor Mikie Sherrill unveiled her first state budget Tuesday, proposing a $60.7 billion spending plan for Fiscal Year 2027 that is roughly $1.9 billion higher than the $58.8 billion budget approved in the final year of former Gov. Phil Murphy’s administration.
The proposal comes as New Jersey faces an estimated $3 billion structural deficit, raising questions among fiscal watchdogs about long-term spending and budget sustainability.
Key Points
• Sherrill proposes a $60.7 billion state budget for FY2027
• Spending would increase by about $2 billion from Murphy’s final budget
• New Jersey continues to face an estimated $3 billion structural deficit
Budget larger than previous year
The proposed budget represents a modest growth rate of about 1.6 percent over the adjusted Fiscal Year 2026 appropriation, according to the administration.
Still, the overall spending level would surpass the $58.8 billion budget enacted in Murphy’s final year in office, pushing total state spending above $60 billion for the first time under Sherrill’s administration.
Deficit concerns remain
New Jersey continues to face long-term fiscal pressures, including a structural deficit estimated at about $3 billion.
“When we started this budget process, we were staring down an estimated 3-billion-dollar structural deficit for this year, or about 5 percent of state expenses, historically one of the worst budget gaps in the nation. If we do nothing, our entire 7.2-billion-dollar surplus will be gone in less than two years – and we’ll be another 750 million in the hole. Since our Constitution requires a balanced budget, failing to act now would trigger far worse in the future. It could mean blunt cuts to public services, for everything from school funding to pensions,” Sherill said.
The Sherrill administration says the new budget begins addressing that gap by reducing the structural deficit nearly in half while maintaining key services.
Property tax relief and education funding
The proposal includes $4.2 billion in property tax relief programs, including funding for the ANCHOR program, Senior Freeze, and the Stay NJ initiative.
The budget also proposes record education spending, including $12.4 billion for K-12 schools and $1.4 billion for preschool programs across the state.
Pension and transportation funding
The budget includes a $7.3 billion payment into the state’s pension system, continuing the policy of making full annual payments.
It also proposes more than $1 billion in operating support for NJ Transit and approximately $2.1 billion for transportation capital projects.
Legislature will review proposal
The proposal now moves to the New Jersey Legislature, where lawmakers will debate and negotiate changes before approving a final spending plan ahead of the next fiscal year.
