In the 11 p.m. hour Friday in Trenton, the fiscal year 2026 budget bill officially cleared both budget committees in the Legislature. That advances the now-$58.78 billion spending plan for June 30 floor votes by the full Assembly and Senate.

Gov. Phil Murphy’s original proposal in February had a topline of $58.05 billion.

As NJBIZ reported, the process has once again been marred by a last-minute, chaotic finish of this months-long budget process. Despite a deal reached between the governor and legislative leaders, the physical bill was still being craft at the end of this week. That delayed Thursday’s originally scheduled vote, calling on the budget committees to return to Trenton Friday evening.

As a reflection of the situation, key members were unable to attend because of the shift, including Senate Budget Chairman Paul Sarlo, D-36th District, and Senate Republican Declan O’Scanlon, R-13th District, who left votes on the legislation in absentia.

The bill was unveiled Friday evening – at long last – shortly before the committees voted.

Surprise spending

“We’re here on a Friday night – it’s approximately 9:45 p.m. or so, I’m texting my two daughters to make sure that they’re getting into bed soon,” said Sen. Michael Testa, R-1st District. “… And it’s reminding me that why we are here and what we do here is so important to leave New Jersey a better place, not only for us, but for our children and grandchildren. “New Jersey deserves better than this – quite frankly. New Jersey deserves transparency and accountability. And getting a budget done at 9:45 p.m. on a Friday night in the summertime isn’t exactly transparent or accountable. … And look, the governor’s budget message was fairly clear – around a $58 billion budget. We find out that there’s $727 million [more] in this budget than we were originally told during the governor’s budget message — the day of voting on a budget.” 

‘We could have done a whole lot more’

Testa questioned some of the spending priorities and particular items. He stressed the need to tighten up the state budget.

“And I appreciate the fact that Gov. Murphy is actually leaving the state with a $6 billion surplus. But we could have done a whole lot more for the working families of the State of New Jersey; especially when we have increases in our energy costs coming this summer. And you’re going to decide whether you’re going to take a vacation; what groceries you’re going to be able to afford; whether you’re going to be able to put gas in your car; or whether you’re going to have to keep your thermostat at 80 degrees.”

“This is my sixth budget,” Testa continued. “I keep repeating myself each and every year that I am here. We need more transparency and accountability. My vote is a no.”

‘In a stronger position’

The votes broke down across party lines in the Senate and Assembly budget committees.

Senate Majority Leader Teresa Ruiz, D-29th District, chairs the Senate Budget Committee in Sarlo’s absence. She read some comments on his behalf.

“Today, we consider a budget that reflects our commitment to moving New Jersey forward, even in the face of difficult fiscal conditions and economic uncertainty. This is a budget built on the foundation of responsibility, equity and resilience – and makes the best use of our available resources to address the pressing needs of residents while maintaining sound financial stewardship,” said Sarlo (via Ruiz). “Thanks to the responsible fiscal management of the past few years, we’re in a stronger position to navigate today’s challenges.”

Fiscal discipline

Sarlon’s remarks continued, “This budget sustains our emphasis on affordability and opportunity; delivers the largest amount of property tax relief in our state’s history; fully funds school aid; restores support for higher education; and provides reliable resources for New Jersey Transit. We’re also protecting everyday taxpayers by eliminating proposed fee increases for recreational activities that are important to middle-class families and communities across our state.

“At the same time, we are maintaining our commitment to fiscal responsibility. This budget includes a full pension payment; preserves an unprecedented surplus amount of over $6 billion to safeguard against future economic disruption; and takes meaningful steps to contain the structural deficit.”

However, that work required difficult decisions and “reductions to some valued programs,” Sarlo’s remarks went on. “These choices were not made lightly, and every effort was made to minimize their impact. We recognize that fiscal discipline is essential if we are to continue delivering for our residents now – and in the future.”

Sarlo also noted the potential loss of significant federal funding in the future and political uncertainty, saying,  “we must remain clear-eyed about the road ahead.”

“This budget positions New Jersey to weather those storms,” he closed.

Stretching dollars

Ruiz highlighted some of the good things that the budget does for New Jersey residents and communities. She also noted the challenges weighing all of the variables and priorities.

“We tried to make $1 out of 50 cents in this budget. And I got to tell you, we stretched it,” said Ruiz.

“[W]e were presented with a budget that was facing – still faces – unprecedented times, without us knowing how the federal schizophrenia is going to impact us moving forward with their decision-making process,” she said.

We tried to make $1 out of 50 cents in this budget – and I got to tell you, we stretched it, and we did it hard.
– Senate Majority Leader Teresa Ruiz, D-29th District

“That at least we know that we are better positioned here – both from a financial standpoint – with our surplus; with some difficult decision-making process in place; with a bond rating that will allow us to potentially have discussions about school construction and putting people to work. But there is great work still be done here in the state. And that’s going to require all of us in this room, if in fact, we are honest about what we’re facing in the future,” she said voting yes.

The ‘ugly,’ bad and good

Top business leaders weighed in during the committee hearings, giving their thoughts about the record spending plan. Michael Egenton, executive vice president, New Jersey Chamber of Commerce, said that there’s the good, the bad and the ugly in this budget.

“Actually going backwards, the ugly. We had a tough budget year last year with the CBT [corporate business tax]. So there isn’t any CBT-like in this year’s budget. But, as you know, it’s a large budget that still includes taxes and fees and the like – and cuts in all other corners that will impact our members,” Egenton testified to the Senate committee.

He noted the positives.

“We know where this budget proposal started back when the governor delivered it. So, we’re happy, relieved, at least what the press had deemed the ‘fun taxes’ were taken out; the buck-a-truck, our cannabis business. As pointed out, our money back to our colleges and universities. Even … the bill that eliminates the sales tax on sunscreen and baby necessities. Money back with manufacturing,” he said offering special thanks to Sen. Testa and Sen. [Linda] Greenstein for their advocacy and noting the sector’s importance.

“And then, of course, there’s some bills that help small businesses – grants. We’re always looking for more grants to help our small businesses, mom-and-pops, main street businesses. And the same plea, whoever our next governor is – we certainly implore that they work closely with you in the state Legislature to continue to help grow jobs in the economy.”

More pros and cons

Chris Emigholz, New Jersey Business & Industry Association, chief government affairs officer, described the spending plan as a hodgepodge patchwork of good and bad policy for the business climate.

“Despite the fiscal responsibility features of the budget … we still have a budget with a structural deficit. Absent meaningful structural reforms, significant spending cuts or tax increases, our next governor will run through that surplus quickly,” Emigholz testified. “We thank the committee for preserving and restoring the proposed cuts for manufacturing and higher education, which were NJBIA priorities.

“Despite that, we still see some cuts to programs that businesses rely on. We also see too much new spending in areas outside of broad investments in workforce development, innovation and infrastructure. These are areas that should be prioritized.

Despite the fiscal responsibility features of the budget, such as another full pension payment and a healthy surplus, we still have a budget with a structural deficit.
– Chris Emigholz, NJBIA, chief government affairs officer

“Despite some important tax relief for manufacturing, innovation and startup investments, and elimination or moderation of some of the proposed taxes, there are still hundreds of millions of dollars in new taxes for a state that is already among the highest taxed in the nation.”

Noting those mixed messages to taxpayers and businesses, Emigholz said NJBIA could not support the budget bill. “But NJBIA does appreciate the improvements made to the budget that was provided to the committee back in February. We thank the budget committee for those modifications and for listening to our perspective.”

South Jersey concerns

The Chamber of Commerce Southern New Jersey raised concerns about South Jersey not receiving its fair share of funding from the corporate transit fee. CCSNJ cited the region’s transit needs and challenges, as well as contributions from regional businesses into the fund.

The group also raised highlighted the tax increases on internet gaming and sports betting as part of this budget. The governor had proposed raising the rates to 25% (from 13% for sports betting, and 15% for online casinos). A compromise was struck at 19.75%.

“CCSNJ cautions that any increase to the internet gaming and online sports wagering tax risks undermining Atlantic City’s competitiveness and, by extension, the broader South Jersey economy,” said Christina Renna, president and chief executive officer, CCSNJ, in a statement. “While we acknowledge that the final budget scales back the governor’s originally proposed 25% increase, the gaming sector must remain attractive to both operators and investors.

“Even modest tax hikes in this area could deter future investment and jeopardize the ongoing recovery and long-term growth of Atlantic City and the region as a whole.”

Reaching across the aisle

Following the Senate committee vote, the Assembly committee did the same – advancing the spending plan a little before midnight.

Despite the frenzied pace down the stretch – and bitter disagreements about the contents and process of the budget plan – all members on both sides of each committee spoke about the positive experience of serving.

The members noted how much time they spend together. And that despite the disagreements, they genuinely are friends, eat together and become bonded during this arduous, months-long process. They especially thanked the staffers for the tireless and often thankless work they do to bring this budget bill into fruition.

“I do want to echo the sentiments of my colleagues from across the aisle. Look, we have been civil to each other. We disagree heavily, at times,” said Testa. “But I have to say that I look at this body  … Washington could take notes from us on how we treat each other with respect.

Washington could take notes from us on how we treat each other with respect.
– Sen. Michael Testa, R-1st District

“… [Even] going through lots of documents that we disagree with, probably about 170 degrees, not maybe 180 degrees; but 170 degrees on. And yet we do it with respect for each other. We talk to each other – and I think more people should get to know the fact that we actually get along with each other and all want the same thing. We just have different avenues of getting there.”

‘Mutual respect’

“Everyone’s correct, we get to spend a lot of time together,” said Assembly Budget Chair Eliana Pintor Marin, D-29th District, following the vote in that committee.

She also said the federal government could learn from the committee and entire Legislature. “Whether it’s even a session day or not, I think that the mutual respect we have for each other is very admirable.

“I appreciate all the time and all the effort. It’s a lot of time,” Marin said. “It’s been raised that we only have a certain amount of time to look over the budget. That’s not true. The months that we’ve worked on this beforehand – that’s when we had the opportunity to review the over 300 pages that the budget is made of. The last half-hour to an hour was really an opportunity that we had to review the 40 pages of additions.

“And a lot of the language that’s in here today has to do with a lot of things that we discussed in those hearings. So, I appreciate all of you really making this happen. The work that OLS [Office of Legislative Services] does is really unbelievable.”

Next steps

As she closed her remarks, Marin stressed that the budget bill is not perfect. However, it does represent the people and priorities that the lawmakers care about, she said.

“No bill is perfect … But it’s the best that we could do. Some of us will be proud of it. Some of us won’t. And that’s OK. But I am proud to talk about why you see an increase in the budget – why it’s so large,” she said. “That’s because we’ve never been in a position that we’ve had the last couple of years to make sure that some of our payments were really getting done; to make sure that we were funding things that for years and years we wished that we could do.

“Probably won’t last forever – and I know we agree to disagree. … But I appreciate everyone here tonight. As I said earlier today, there’s no place I would rather be on a Friday night than with all of you.”

Full votes are set for Monday. Then the measure heads to Murphy’s desk for his signature ahead of the midnight July 1 deadline.