Reaction continues to fly in from all sides of the great Garden State, following Gov. Phil Murphy’s final Budget Address as New Jersey’s 56th governor.

As NJBIZ reported, the term-limited Murphy unveiled a $58.05 billion Fiscal Year 2026 budget proposal Feb. 25. You can learn more extensive details about the plan here and check out a one-sheet here.

“Our budget proposal for the next fiscal year reflects our ongoing—and unrelenting—commitment to building a New Jersey that is stronger, fairer, and more prepared for the future,” said Murphy. “Over the past seven plus years, we have made historic progress in advancing this mission, but we’re not done yet. And over the next year, our absolute top priority—as it has been since day one—is delivering economic security and opportunity to every New Jerseyan.”

On his side of the aisle, Senate President Nick Scutari, D-22nd District, said the proposal recognizes the fiscal challenges we face.

“We are confronted with more uncertain economic conditions and the threat of reduced federal aid that must be factored into budget considerations,” said Scutari. He stressed the need to be responsible in crafting the budget to continue progress made in a number of areas, while also remaining disciplined in controlling and identifying savings in government.

“In the coming weeks, the Senate Budget Committee will conduct a thorough review of the Governor’s proposal with input from the public, businesses, advocacy groups, and others who are impacted by the spending plan,” said Scutari. “We will work to develop a budget plan that addresses the state’s needs in a responsible and effective way.”

‘Very difficult decisions’

Paul Sarlo, D-36th District, will play a critical role in that process – serving as the longtime chairman of the Senate Budget Committee.

“This budget will require some very difficult decisions,” said Sarlo. “We are facing challenging economic conditions that will impact state revenues, coupled with the potential reduction of a substantial amount of federal aid. The budget will be in flux for some time because of the ominous uncertainty of federal funding.”

Sarlo echoed Scutari about the need to maintain fiscal discipline while prioritizing strategic investments, pension payments, school funding, debt reduction, property tax relief and other measures to improve affordability for New Jerseyans.

“This is the start of the budget process,” said Sarlo. “The Senate Budget Committee will devote the next four months to thoroughly reviewing the governor’s proposal. We will develop a fiscally responsible budget that addresses the priorities of the people of New Jersey, makes necessary cuts to reduce the costs of government – and to only use revenue raisers as a last resort.”

Ensuring affordability

Sarlo’s counterpart on the Assembly side, Budget Committee Chair Eliana Pintor Marin, D-29th District, said the Legislature and her committee are committed to listening to the concerns of the public as well as gathering input from both communities and administration officials to ensure that every voice is heard.

“The budget process is an opportunity to ensure that taxpayer dollars are being spent responsibly, and that the needs of every New Jersey resident are addressed,” said Pintor Marin, noting the aforementioned potential federal funding cuts and how critical it is to protect the services that support the most vulnerable while maintaining a sustainable future for all.

“The budget process is an opportunity to ensure that taxpayer dollars are being spent responsibly, and that the needs of every New Jersey resident are addressed,” said Pinto Marin. “As chair of the Assembly Budget Committee, my focus will remain on creating a budget that reflects the priorities of our families and ensures that New Jersey remains an affordable place to live and raise a family."

‘Anything but affordable’

“As we begin our review of the governor’s proposed budget for Fiscal Year 2026, I thank the governor for partnering with the Legislature in fulfilling our promise of making New Jersey more affordable by fully funding property tax relief programs, including StayNJ, which will cut property taxes in half for nearly all seniors,” said Assembly Speaker Craig Coughlin, D-19th District. “Working together, we are telling New Jersey residents that cutting property taxes is a top priority.”

Coughlin touted item proposals such as the full pension payment, record school funding and more. He also made note of the potential uncertainty at the federal level with issues like health insurance, education, tariffs and more.

“As we approach the months ahead, I look forward to hearing from the public in order to reach an agreement on a budget that reflects our values, delivers on our promises of affordability and creates a brighter future for the families of our state,” said Coughlin.

Of course, Republicans had a much different take on the proposal, which they discussed with reporters during a press conference following the address.

“This upcoming budget is anything but affordable. We need to strip it down to the studs and rebuild with responsible spending – and that’s what we intend to do during the budget season,” said Assembly Republican Budget Officer Nancy Munoz, R-21st District.

She added that the Democrats are deflecting blame on the federal government for things that have not even happened yet.

“And meanwhile, they’re spending money we don’t have – and relying on revenues that won’t materialize,” said Munoz.

Living on the edge

“Eight years ago, Gov. Murphy campaigned on raising taxes and increasing spending in the State of New Jersey ,” said Senate Republican Leader Anthony Bucco, R-25th District. “Remember – if taxes are your issue, New Jersey is probably not your state. Well, listen, he certainly delivered on his promises – but he said these policies would make New Jersey stronger and fairer.”

Bucco said that today we see the results of those policies.

“Standing on the edge of a fiscal cliff – I ask you, stronger and fairer for who? As you heard, taxes and spending policies around the state have made New Jersey more unaffordable,” said Bucco. “Whether it’s an increase in the cost of eggs or electricity, the increase in tolls, transit or gas prices – they can’t raise the money fast enough to keep up with the spending. The governor said it today – we’re going to have another structural deficit.”

“The fact of the matter is – we continue here in the state to spend more than we take in,” Bucco continued. “And the Republican party – my colleagues in both houses – have said it for years. Eventually, this state was going to hit the fiscal cliff – and quite frankly, if it wasn’t for COVID, we would have been here sooner.”

‘The administration of missed opportunities’

Opening his remarks, Senate Republican Budget Officer Declan O’Scanlon, R-13th District, referenced his recent comments on News 12 New Jersey about the governor’s budget. At the time, O’Scanlon said he expected Murphy to slather gallons of lipstick on this pig and say that things are rosy.

The senator noted that on the way through the Assembly Chambers Tuesday, Murphy handed him a lipstick.

“He got the joke – and I appreciate that. I genuinely like the governor – and I think it’s mutual, even though I’ve been known to piss him off occasionally,” said O’Scanlon. “Look – this budget is that pig, I do have to say. And it’s the way it was designed for years, to permit this administration to kind of glide out and dump the problems of New Jersey on to the next governor. Republicans predicted this year for years.”

He said that the situation is a problem.

O’Scanlon also said he believes that the structural deficit will end up between $3 billion and $4 billion for the next governor, who takes office in 2026.

“And that is a tremendous problem – and it’s a tragedy,” O’Scanlon continued. “This administration will go down as the administration of missed opportunities. We could have used the breathing room that the federal largesse – between $15 billion and $20 billion of it – to fix our budget; to right our ship; to do the reforms necessary to make New Jersey sustainable for the long-term; to do the things that the governor is suggesting he did today – without any facts behind it.”

“New Jerseyans are not feeling more secure in their fiscal future today – than they were seven years ago,” said O’Scanlon.

Business left behind?

“When he [Murphy] started, the budget was $34.5 billion – it’s now a $58 billion [proposed budget] in eight years,” said Assembly Republican Leader John DiMaio, R-23rd District. “That’s 68% in eight years – $23.5 billion more in spending. Yet schools remain underfunded all across the state.”

DiMaio stressed that this is unsustainable.

“We’ve said it’s been unsustainable. It’s going to go off a cliff,” said DiMaio. “He’s limping across the finish line.”

Business leaders are weighing in with their reaction.

“After warnings that the proposed 2026 state budget would contain significant cuts, at first glance, it closely mirrors those in each of our last seven years,” said Tom Bracken, President and CEO, New Jersey Chamber of Commerce. “It includes additional spending and increases in programs bolstering the ‘fairer’ side of our economy, but once again, little assistance to the business community to enable them to generate the sustainable revenue needed to pay for everything.”

Bracken said that the business community has been warning that a mix of increased state spending with a lack of recurring revenue would lead to a fiscal imbalance.

“You cannot increase spending by more than 65% over eight years without a balanced emphasis on sustainable, organic revenue growth through expansion of our business community. That has not happened in the governor’s two terms and revenue is declining,” said Bracken.

“Expenses up-revenue down does not work and never will. Even though the governor is reducing some overhead, there is an old saying: You cannot cut your way – or tax your way – to prosperity,” Bracken said. “We need pro-business legislation to create significant economic growth and the prosperity we deserve.”

Ticking up taxes

New Jersey Business & Industry Association (NJBIA) President and CEO Michele Siekerka shared those sentiments. She said that Murphy’s final budget proposal represents another unsustainable spending increase with another structural deficit built in.

“While today’s address was light on specifics, we know it marks slight improvements from last year’s record-setting business tax increase and larger structural deficit and maintains a surplus for the next governor,” said Siekerka. “But it also still increases other taxes to continue to support an unsustainable spending rate in New Jersey.”

She applauded the full pension payment for a fifth-consecutive year, while calling for pension and benefit reforms for future state employees – and future budgets.

But Siekerka questioned the school funding formula that has left too many districts with unforeseen funding changes; as well as the calls in the budget for various fees and taxes to serve as revenue raisers and some of the cuts proposed.

“When affordability is still an issue, we question the move to increase any taxes whatsoever, even if they’re so-called vice taxes on internet gambling, alcohol, cigarettes and cannabis products,” said Siekerka. She was also critical of the return of last year’s proposed buck-a-truck proposal, which would institute a $2 excise tax in the FY2026 budget. “There is also a significant increase on real estate transactions. The impacts of the doubling and tripling of real estate taxes will filter down to buyers and sellers of homes less than $1 million as it will slow the market, amid continuing affordability issues for home buying.”

“We see $815 million committed to NJ TRANSIT in FY26 from the Corporate Transit Tax,” Siekerka continued. “That appears to be most of the projected amount to be collected in this coming fiscal year and we are glad to see it going to its intended purpose — to plug the NJ TRANSIT deficit,” she continued. “However, $1 billion collected from our largest job creators last year still remains in surplus and therefore open for purposes other than NJ TRANSIT. Our business community deserves clarity on the use of that money as it was intended for NJ TRANSIT.”

Hindering growth

Christina Renna, president & CEO of the Chamber of Commerce of Southern New Jersey (CCSNJ), expressed many of the same concerns in her statement.

“While we appreciate Gov. Murphy’s commitment to investing in infrastructure, education, and economic development, we are deeply concerned about the proposed $58.05 billion spending plan’s reliance on increased taxes and fees that will hinder business growth and economic recovery,” said Renna. “In particular, the addition of approximately $1 billion in new tax increases poses a grave threat to New Jersey’s competitiveness and affordability. Additionally, we remain troubled by the continued expansion of state spending, which places an increasing burden on taxpayers and businesses without clear plans for long-term financial sustainability.”

She echoed Siekerka on the truck traffic excise fee and the proposed increased tax on sports betting and internet gaming from 13% to 25% — both of which could particularly impact South Jersey.

“The CCSNJ urges the Governor and Legislature to consider alternative solutions that foster economic growth rather than hinder it,” said Renna. “We stand ready to collaborate on policies that enhance New Jersey’s economic competitiveness while ensuring fiscal responsibility. We look forward to engaging with policymakers to advocate for a budget that supports businesses, encourages investment, and benefits the entire state economy.”

AC impact

The proposed online gaming tax increase drew sharp pushback from the Casino Association of New Jersey (CANJ).

“The Casino Association of New Jersey strongly opposes the proposed tax increase for online gaming, which will threaten the stability of Atlantic City’s gaming and tourism industry, as well as the industry’s workforce,” said CANJ President Mark Giannantonio. “This proposal is ill-advised and, if passed, will have significant adverse consequences for brick-and-mortar casinos.

“The partnerships between online gaming companies and Atlantic City casinos have established significant cross-marketing and promotions, such as complimentary rooms, entertainment, and promotional gaming credits for use at the properties to help bring more visitors to Atlantic City.

“More importantly, the financial benefits of these partnerships provide additional resources that are reinvested in our brick-and-mortar Atlantic City properties, support our operations, and augment our ability to compete in the regional marketplace more effectively.  A tax hike in this difficult economy would threaten these benefits and negatively impact the operations, workforce and marketing of our casino hotel properties.”

Risking ‘a New Jersey success story’

And this issue also drew the very rare, bipartisan, post-Budget Address statement from two South Jersey senators on both sides of the aisle – Sen. John Burzichelli, D-3rd District and Sen. Michael Testa, R-1st District.

“Simply put, doubling the tax on online sports betting and iGaming is putting a New Jersey success story at significant risk,” said Testa and Burzichelli. “Any effort to increase this tax on New Jerseyans threatens all of the progress New Jersey has made, especially at levels that would make New Jersey’s customers too heavily taxed. A tax increase would negatively impact jobs, industry investment, and our New Jersey customers, and it could affect future revenue growth for the state.”

The two South Jersey senators said they look forward to working with the governor, Legislature and all stakeholders to ensure that the sports betting industry continues to thrive in New Jersey.

“This is just the beginning of the process, and we will work with the Speaker, Senate President, and Governor to determine the best path forward for both the state and the industry.”

Please stay with NJBIZ for further budget coverage, analysis, and reaction.