Governor Mikie Sherrill presented this Tuesday her first state budget proposal for the fiscal year 2027, outlining a fiscal plan aimed at closing New Jersey’s multibillion-dollar deficit while lowering costs for residents and avoiding tax increases.
Sherrill said the plan addresses an estimated $3 billion structural deficit facing the state while maintaining pension payments, providing historic property tax relief and making targeted investments in housing, healthcare, transportation and education.
The governor described the proposal as “the most fiscally responsible budget our state has seen in years.”
The spending plan includes $2.6 billion in budget solutions, combining nearly $2 billion in spending cuts with more than $700 million in new revenue from corporate tax loophole closures, while preserving key programs and investments.
Sherrill said the budget is designed to put New Jersey on a path to structurally balance its budget by 2028.
“If we do nothing, our entire $7.2 billion surplus will be gone in less than two years,” Sherrill said.
Gov. Mikie Sherrill’s budget proposal highlights for New Jersey
Closing the deficit
Table of Contents
- Closing the deficit
- No new taxes on residents
- Record property tax relief
- Lowering utility costs
- Housing affordability initiatives
- Healthcare cost reforms
- Transportation and infrastructure
- Investments in education and childcare
- Mental health and online safety for children
- A focus on affordability for New Jersey
- Addresses an estimated $3 billion structural deficit
- Introduces $2.6 billion in budget solutions
- Nearly $2 billion in spending cuts
- More than $700 million in new revenue from corporate tax changes
- Reduces the structural deficit by $1.2 billion
- Maintains the state’s $7 billion pension payment
No new taxes on residents
- Budget does not raise taxes on individuals
- Focuses instead on corporate tax loophole closures
- Limits deductions used by large companies
This includes key revenue measures such as:
- Net operating loss deduction cap for large corporations: Expected savings of $500 million
- Alternative Business Calculation reform: This restricts deduction to businesses earning under $1 million annually; expected savings of $120 million
Record property tax relief
The budget includes a whopping $4.2 billion in property tax relief, the largest in New Jersey history. The changes include:
- Reforming the Stay NJ program
- Limiting eligibility to households earning $250,000 or less
- Expanding support through the ANCHOR program for senior renters
The changes are expected to save hundreds of millions annually while focusing benefits on middle-class households.
Lowering utility costs
Gov. Sherrill said New Jersey residents face some of the highest electricity costs in the nation. The new actions and investments include:
- State of Emergency to freeze utility rate hikes
- Expanding solar and battery storage projects
- Modernizing natural gas infrastructure
- Exploring new nuclear energy opportunities
- Increasing power supply to lower long-term energy costs
Housing affordability initiatives
Housing costs have surged across New Jersey, with some areas seeing 60% price increases since 2020. Sherrill is proposing the following measures in her budget:
- $70 million investment in the Affordable Housing Trust Fund
- Expanded first-time homebuyer down payment assistance
- Expanded programs to combat homelessness
- Additional support for veterans housing
Sherrill also said she will pursue legislation to restrict algorithm-driven rent and pricing practices used by some companies.
Healthcare cost reforms
Healthcare costs remain among the highest in the country, according to the governor, so she’s proposing:
- New technology to help residents maintain Medicaid eligibility
- Requirements that companies with 50+ workers on Medicaid either provide insurance or pay penalties
- Estimated $145 million in annual revenue
- Reforming the State Health Benefits Program
- Lowering prescription drug costs by targeting Pharmacy Benefit Managers (PBMs)
The state could save $20 million in Medicaid drug costs by limiting PBM practices.
Transportation and infrastructure
The budget proposes continued investment in public transportation and infrastructure, including:
- No service cuts to NJ Transit
- Purchase of 40 new rail cars
- Purchase of 250 new buses
- Continued funding for the Gateway Tunnel project
The Gateway project is expected to generate $20 billion in economic growth.
Investments in education and childcare
The proposal maintains a record investment in K-12 education while targeting improvements in efficiency.
- Continued funding of the school funding formula
- Expansion of high-impact tutoring programs
- Evidence-based literacy initiatives
- Shared services to reduce school district costs
Additional funding for early childhood initiatives:
- Expansion of the Family Connects home visitation program statewide
- Continued support for childcare assistance programs
Mental health and online safety for children
The budget also includes initiatives focused on youth mental health and social media safety to:
- Create a Social Media Research Center
- Funding for the Office of Youth Online Mental Health Safety and Awareness
- Launch of the SPARK program, placing mental health support directly in schools
A focus on affordability for New Jersey
Sherrill described the spending plan as an “affordability budget” aimed at helping working families remain in the state amid rising living costs.
The governor said the proposal is intended to restore fiscal stability while reinvesting savings into programs that lower costs for residents.
“This is an affordability budget rooted in fairness for hardworking families,” Sherrill said.
