The basics:

• Gov. Phil Murphy signs final $58.8B state budget July 1
• Includes $1B in tax hikes, $12.1B in school funding
• $7.2B pension payment and $6.7B surplus set aside
• Business leaders warn of anti-growth spending and instability

Just before midnight on July 1, Gov. Phil Murphy signed the final budget of his administration into law. The record $58.8 billion spending plan includes a number of notable investments in key areas around the state – while also being marked, once again by a final part of the process that included a Friday night committee vote and more than $700 million in added spending from the plan laid out in Murphy’s February budget address. [See box below]

Murphy said that this plan exemplifies his administration’s dedication to fiscal responsibility, affordability and opportunity for all New Jerseyans.

“Over nearly eight years in office, we have maintained a steadfast commitment to building a stronger and fairer New Jersey and righting our fiscal ship,” Murphy said. “I’m proud that this budget caps off an eight-year journey to turn our state around and delivers greater economic security and opportunity. With the help of our legislative partners, we are moving New Jersey toward a brighter future for every child, student, worker, parent and senior citizen who calls our great state home.”

“The budget upholds our administration’s promise to make sure that New Jersey remains the best state in the nation to live, work, raise a family and retire,” said Lt. Gov. Tahesha Way. “This state budget is a direct result of the strong collaboration between Gov. Murphy, Treasurer [Elizabeth Maher] Muoio, and legislative leadership.”

“This budget is the culmination of a nearly eight-year effort to improve conditions for all New Jerseyans, building a fiscally stronger state that is more affordable for all,” said Muoio.

Of course, this particular budget comes against the backdrop of federal cuts through DOGE [Department of Government Efficiency] and President Donald Trump’s recent One Big Beautiful Act, which affect Medicaid and other programs — possibly forcing future state action to adjust.

“This is a fiscally responsible budget that puts New Jersey families first. At a time when working people are being left behind by the misguided decisions in Washington, we’re making smart, strategic investments that deliver meaningful support, especially through historic property tax reductions, strong funding for public education, higher education, health care, transit, and a full pension payment,” said Senate President Nick Scutari, D-22nd district; Senate Majority Leader Teresa Ruiz, D-29th District; and Senate Budget Chair Paul Sarlo, D-36th District, in a joint statement.

“We’re grateful to Gov. Murphy and our colleagues in the Legislature for coming together to enact a disciplined, forward-looking budget that safeguards essential services, expands opportunity, and reinforces New Jersey’s long-term fiscal strength.”

On the other hand

Republicans were not enthusiastic.

“This is the eighth and final budget produced by this Democrat-led Legislature and the Murphy administration. And where have we ended up?” said Senate Republican Budget Officer Declan O’Scanlon, R-13th District. “You’re a hair’s breadth away from spending $60 billion – almost $25 billion more than Gov. [Chris] Christie’s last budget; with a freight train of spending momentum that will, mark my words, soon necessitate brutal cuts to programs or brutal tax increases on our beleaguered taxpayers – or both.”

O’Scanlon added, “The only reason this year was tough was because we’re starting to run out of that federal cash and one-shot gimmicks. Revenues have performed fairly well. A balanced budget with reasonable spending restraint would have made this a good year. The fact that it’s being referred to as tough is a dead canary in the budget coal mine. Because of the mess that this administration is leaving us, the next few years are going to be brutal. And I already hear the buck passing and beginnings of blame being shifted to President Trump.

“This mess has zero to do with the federal government. It’s totally homegrown – and was totally avoidable.”

‘Deeply disappointed’

Top business leaders expressed also concerns about the blueprint.

“We are deeply disappointed in this year’s budget,” said New Jersey Chamber of Commerce President and CEO Tom Bracken. “It marks the eighth-consecutive year of overspending and continues to show a troubling lack of focus on growing New Jersey’s current and future economies.”

Bracken said that the budget makes the state less affordable, less competitive and less business friendly.

“Rather than driving progress, it maintains a status quo that has failed to deliver real economic success – and it’s not what New Jerseyans want, as reflected in a recent Rutgers-Eagleton poll showing widespread dissatisfaction with the state’s economic direction,” said Bracken.

He also cited positive elements, such as support for manufacturers, restoration of community college funding, elimination of certain sales taxes, expedited building inspections, and increased assistance for small businesses. But Bracken said these measures are overshadowed by deeper concerns about the state’s long-term health.

“The fiscal 2026 budget relies on $1 billion in tax increases – including measures that significantly impact New Jersey’s growing online gaming and sports betting industries – and draws heavily from the state’s surplus to achieve balance,” said Bracken. “We are disappointed to see significant cuts to our tourism industry. In less than one year, the FIFA World Cup will bring millions of people through New Jersey.

“Our tourism industry needs support now more than ever.”

‘An improvement … but’

He pointed to the increased realty transfer tax on residential and commercial properties as one of the most damaging provisions in the budget.

“The employer community thought a 2% corporate business tax surcharge and a 2% corporate transit fee were bad – this is a potential 3.5% tax increase on business when they sell property! That’s a ‘back-door’ tax that is very concerning,” said Bracken. “This makes the state even less affordable and competitive by driving up costs, especially for already struggling small business owners.

“By applying broadly, the tax discourages investment and growth — exactly the opposite of what New Jersey needs to attract new residents and retain companies.”

New Jersey Business & Industry Association President and CEO Michele Siekerka said, as with any major spending plan that attempts to satisfy the needs of so many different interests and programs, there is much to appreciate and much to criticize in the budget.

“We applaud the Legislature for working toward a budget that is by-and-large an improvement from what it was handed in February,” said Siekerka. “But at the end of the day, there is another structural imbalance; more than $700 million in additional, last-minute spending; and hundreds of millions of dollars in tax increases – particularly for the business community – for one of the highest-taxed states in the nation.

“Obviously, we didn’t get here overnight with a budget that has grown nearly 70% under Gov. Phil Murphy. But it is high time our policymakers look forward with a new approach under a new administration – no matter who our next governor is.”

Missed opportunity?

Siekerka referenced the NJBIA’s recently released 2025 Blueprint for a Competitive New Jersey. She stressed the need for structural reforms to the pension and benefits system. “We need more pro-growth spending and fewer one-time gimmicks that give no bang for the buck,” she said.

Bracken echoed that sentiment.

“Using one-time resources to fund recurring expenses sets a dangerous precedent and leaves the next governor facing serious financial challenges and worsening structural deficits,” said Bracken. “To make matters worse, $700 million in unaffordable spending was tacked on in the final hours, further compounding the state’s fiscal instability.”

We need more pro-growth spending and fewer one-time gimmicks that give no bang for the buck.
– Michele Siekerka, NJBIA president and CEO

Bracken said that what is noticeably absent from this budget is a forward-looking, growth-oriented economic strategy.

“New Jersey continues to miss the opportunity to unleash the full potential of our business community,” he said.

“We need budget policies that make New Jersey more competitive and less anti-business,” said Siekerka. “And we need an improved and more transparent process for how our budget is finalized.

“Absent any of this, New Jersey will continue its solemn march toward a fiscal cliff, with more residents unable to afford to live, work, and play here and more businesses unable to sustain or grow. We can do better. In fact, we need to.”

NJ’s next governor

Of course, this final budget comes as the race to succeed Murphy ratchets up between candidates Republican former Assemblyman Jack Ciattarelli and Democratic U.S. Rep. Mikie Sherrill. Bracken said New Jersey needs a governor who will prioritize fiscal discipline, reject new taxes, and place a strong emphasis on economic development and business attraction.

“This budget only steepens the economic mountain our next governor will have to climb – an already enormous challenge,” said Bracken. “After eight years of punitive budget targeting the employer community, I’m hopeful that chapter is finally closing.”