Gov. Phil Murphy signed a $56.6 billion budget into law on Friday night, just moments before the midnight deadline. The spending plan, passed by the Democratic-led Legislature hours earlier, avoids a government shutdown and most notably increases taxes on high-earning corporations to support the state’s transit agency.
The budget allocates billions for K-12 education, property tax relief, public pensions, and various programs. Corporations earning over $10 million annually will face a tax increase, with the top corporate rate rising to 11.5% from 9%. This hike aims to support the struggling New Jersey Transit, which is facing a major budget crunch.
The spending plan represents a modest 4% increase from last year’s budget, with a focus on fully implementing an aid formula ratified by the state Supreme Court. K-12 funding will rise to over $11 billion, a nearly $1 billion increase. Additionally, $2.5 billion is allocated for direct property tax relief, continuing programs introduced in 2022 and 2023 to assist residents, renters, and older residents.
While Republicans and business groups have criticized the tax increases, Murphy and Democratic lawmakers argue that the budget will create economic opportunities and invest in the state’s potential.
The budget also includes funding for various initiatives, such as ending homelessness, supporting re-entry programs, and arts initiatives.
This budget marks Murphy’s second-to-last ahead of next year’s gubernatorial election, when he will be term-limited. Since taking office in 2018, Murphy and the Democratic-led Legislature have transformed the state’s finances, increasing funding for education, public pensions, and the rainy day fund, while also implementing tax increases on high earners.