Special Edition ITL: Governor Murphy Delivers FY2025 Budget Address

Special Edition ITL: Governor Murphy Delivers FY2025 Budget Address 

Governor Murphy delivered his seventh annual budget address on Tuesday afternoon in Trenton before both chambers of the state legislature, with a theme of making New Jersey more affordable for families. 

Murphy’s proposed $55.9 billion spending plan for FY2025 is the largest in state history, up about 5% over last year’s budget. The plan proposes significant investments in several of the state’s tax relief programs and a new affordable housing initiative and a plan to fund NJ Transit, the country’s largest public transportation system, by imposing new taxes on high-earning businesses. 

“With our budget, we will make life more affordable for more families. We will continue meeting our sacred obligations — from fully funding our public schools, to fixing NJ TRANSIT once and for all,” said Governor Murphy. “We will create a new generation of economic opportunities in the industries of the future. We will maintain fiscal responsibility, while staying true to our values — so New Jersey is prepared for the challenges of tomorrow.”

NJ Transit 

The cornerstone of Governor Murphy’s proposed budget is a new corporate transit tax that would dedicate a new source of funding to NJ Transit and help plug fiscal gaps predicted in the coming years.

The tax would apply to corporations with net annual incomes of more than $10 million in New Jersey that Treasury officials estimate is about 600 companies and would have a retroactive effective date of Jan. 1, 2024.

Those companies would pay a 2.5% fee on their total profit when it is more than $10 million, going back to the first dollar earned. The estimated revenue for the 2025 fiscal year would be $1.023 billion because it would be retroactive to January 2024. The estimated revenue for fiscal year 2026 would be $859 million, down from about $1 billion collected from the corporate business tax surcharge, a fee charged to businesses that earned more than $1 million and expired at the end of 2023.

The state Transportation Trust Fund, which is set to expire in June, is not addressed in Murphy’s proposed budget. The TTF had previously expired in July 2016 when the Christie administration and the Legislature couldn’t come to an agreement for months over how to renew the fund, which stalled infrastructure projects at the Department of Transportation and NJ Transit., before a resolution was eventually negotiated.

Education Funding

The 2025 fiscal budget includes that final year of phasing in the S2 school funding formula and provides $908 million more in school aid to districts throughout the state. This is the majority of the proposed budget’s new spending.

The proposed budget includes an additional $124 million for preschool education; $20 million of that would be for expansion in new districts to create more than 1,000 new seats. More than $100 million will be used for the Cover All Kids health coverage program as well as $30 million for school meals.

Murphy’s proposed budget includes a $2.5 million literacy screening grant program to help districts to get resources to the kids that need them most.

Tax Relief 

In his address, Governor Murphy cited several tax relief programs that are being renewed in his proposed budget.

The Affordable New Jersey Communities for Homeowners and Renters (ANCHOR) program  will receive about $2.3 billion in its third year, building on a successful second payout that made it the largest property tax relief program initiative in state history.

The StayNJ program, which was created as the 2024 budget was finalized, will get another $200 million set aside. The program received $100 million last year and isn’t set to go into effect until 2026. The law does have a caveat about funding the program — a surplus of 12% is needed, which is something the proposed budget does not have.

Governor Murphy also proposed funding for RetireREADY NJ, a state-sponsored retirement savings program for private sector employees. It’s run by an executive director and a board which are already looking for New Jersey employers who are willing to participate in the pilot launch.

Affordable Housing 

Governor Murphy’s proposed FY2025 budget includes support for the Affordable Housing Trust Fund which will be used alongside federal funds to help homeless veterans find stable housing. About $15 million from the fund will also be used to support the Homeownership Opportunity Development program and the Low-Income Homeownership Rehabilitation Fund.

Another $32 million will also be allocated for down payment assistance and $10 million will be committed through the Department of Community Affairs to incentivize municipalities to create new affordable accessory dwelling units.

Ending Tax Breaks for Electric Vehicles 

Governor Murphy announced the phase-out of the state’s 20-year-old tax waiver for the purchase of new electric vehicles over the next 3 years. The move is expected to net about $70 million annually. 

Warehouse Tax

Under a new plan introduced by Governor Murphy, the state would implement a new $1 fee on every truck leaving a warehouse facility to deliver a load of goods. This new fee is expected to generate about $10 million a year in new revenue for the state.

Surplus

The governor’s proposed budget includes a surplus of $6.1 billion or about 11% of the total budget. Surplus are often used to keep the government running in the event of future revenue shortfalls. 

Republican Response 

Republican Senate Minority Leader Anthony Bucco called Murphy’s budget “more of the same” and said that it “continues to spend more than the state takes in.” Bucco added, “from our perspective we think when you look behind the curtain, you’re going to see something that’s a lot different than what was projected today.”

Republican Senate Budget Officer Decan O’Scanlon said, “history is going to judge this administration as one of the tragically missed opportunities.”

Assembly Republican Conference Leader Chris DePhillips addressed Murphy's  plan to fund NJ Transit with new taxes, saying “Make no mistake, this so-called transit fee is the corporate business tax surcharge lite and it only exists to feed the Murphy administration’s insatiable appetite for spending taxpayers’ dollars.  While neighboring states are realizing the benefits of lowering their corporate taxes, New Jersey raises taxes and breaks commitments to the business community. The spending, the deficit and the constant tax increases are unsustainable. There will be a fallout and it will impact every resident in New Jersey.”