Governor Mikie Sherrill delivered her first budget address to the New Jersey Legislature on March 10, 2026. The speech addressed a broad range of issues relevant to southern New Jersey's business community. Below is a summary of the proposals most relevant to our membership.

The Fiscal Situation

The Governor outlined the challenges that the state faces, including an estimated $3 billion structural deficit - among the worst budget gaps in the nation. Without action, she warned that the state's $7.2 billion surplus would be gone within two years. She attributed the crisis to expiring COVID-relief funding, reductions in federal program funding, decades of short-term budget fixes by prior administrations of both parties, and rising costs across healthcare, education, and state operations. Her proposed solution, as presented, totals $2.6 billion: nearly $2 billion in spending cuts and over $700 million in new revenue from closing corporate tax loopholes - with no new taxes on individual New Jerseyans and full funding of the state pension system.

Key Provisions for Business

Employer Medicaid Mandate

This is the proposal with the most direct impact on larger member businesses. Any company with 50 or more employees on Medicaid would be required to either provide those workers with employer-sponsored coverage or pay a financial penalty. The Governor framed it as raising $145 million annually to offset federal Medicaid cuts. While her language targeted large national employers, the 50-employee threshold means businesses across hospitality, food service, healthcare, logistics, and retail in Southern New Jersey could be affected. The Chamber will be engaging actively with the administration and Legislature as this proposal is examined, and we encourage affected members to share their concerns with us directly.

Corporate Tax Changes

Two tax proposals are worth noting. The net operating loss deduction cap primarily affects larger corporations writing off COVID-era losses and is unlikely to impact most small and mid-size members. More relevant to our wider membership is the restoration of the Alternative Business Calculation deduction to businesses with income under $1 million per year, returning a meaningful tax benefit to the small businesses it was originally designed to serve. The Chamber is reviewing the full implications of both proposals and recognizes that varying sized-businesses may be affected differently as these changes move through the Legislature.

Transportation

The Governor committed to no NJ Transit service cuts, fleet modernization including 40 new rail cars and 250 new buses, the opening of the new Portal Bridge, and continued fighting for Gateway Tunnel funding. Transportation is a priority issue for the Chamber. As our members know, the Chamber successfully advocated for $5 million directed toward six micro-transit lines across South Jersey and look forward to continuing that work in partnership with the administration and the South Jersey Transportation Authority. These lines will go live later this year.

Energy

Governor Sherrill declared a State of Emergency to freeze utility rate hikes and signed an executive order to increase power generation immediately after taking office in January. Her approach included expanding solar and battery storage while also modernizing natural gas facilities and exploring new nuclear opportunities. This aligns with the Chamber's long-held position that energy diversity is essential, and no source should be taken off the table.

Housing Affordability

With home prices and rents up as much as 60 percent since 2020, the Governor committed $70 million to the Affordable Housing Trust Fund and expanded down payment assistance for first-time buyers. For South Jersey employers, housing affordability is a workforce issue, one we noted in our Long Story Short Report released in 2024, and our members regularly cite the cost of living as a barrier to recruiting and retaining employees. The Governor made that connection herself, pointing to workers who love New Jersey but live across the border because they cannot afford to stay.

Healthcare Costs

Beyond the Medicaid mandate, Governor Sherrill committed to reforming the State Health Benefits Program to keep it solvent and reduce costs, and to passing comprehensive pharmacy benefit manager (PBM) reform legislation. PBM reform has been a priority conversation in Trenton for several years, and the Governor's commitment to move it forward this session will be closely watched by healthcare stakeholders across our membership.

The South Jersey Opportunity Around America 250 & World Cup

As this budget moves through the Legislature, the Chamber will be watching closely to ensure southern New Jersey receives its fair share of the investments being proposed. Positioned between Philadelphia and New York, with America's 250th anniversary and the FIFA World Cup approaching, our region has an extraordinary opportunity to generate economic activity that benefits the entire state. That opportunity requires investment and South Jersey cannot be an afterthought in how this budget is ultimately allocated.

The Fate of Stay NJ

One of the more politically charged proposals in the budget is the Governor's proposed modification to Stay NJ, the property tax relief program for senior homeowners championed by Assembly Speaker Coughlin. Governor Sherrill is proposing to cap eligibility at households earning $250,000 or less, down from the current $500,000 threshold, arguing that relief should be targeted at middle-income seniors rather than higher-earning households. The change would save the state hundreds of millions of dollars annually and is part of a broader $4.2 billion property tax relief package the Governor describes as the largest in state history.

Expect this to be one of the more contentious debates of the budget season. Stay NJ was a signature achievement of Speaker Coughlin, and there is already some resistance in the Legislature to rolling back its eligibility. While property tax relief is not a direct business issue, it reflects the broader affordability of living and working in New Jersey - and for southern New Jersey employers trying to attract and retain a workforce, anything that affects whether people can afford to stay in this state matters to the bottom line.

What Comes Next

The budget address is the opening of a process that runs through June 30, 2026, when the Governor must sign a balanced budget. The Chamber will be monitoring all of the above proposals closely and engaging with the administration and legislative leadership on behalf of our membership throughout the session.

If your business may be affected by any of the above, we want to hear from you. Please reach out to Hilary Chebra, Director of Government Affairs at hchebra@chambersnj.com with your comments and concerns.

To read the full speech, click here.

To view the Budget in Brief, click here.