The Legislature voted on Monday to approve a $58.78 billion FY26 state budget that contains more than $700 million in spending beyond what the governor had originally sought while maintaining some, but not all, of his proposed tax increases.
The Senate voted 26-13 in favor of S-2026 early Monday afternoon and the General Assembly gave it final passage at 6 p.m. by a vote of 52-27 with one abstention. The bill now goes to Gov. Phil Murphy for his signature. The state is required to have its FY26 spending plan enacted by July 1.
“As with any major spending plan that attempts to satisfy the needs of so many different interests and programs, there is much to appreciate and much to criticize in this budget,” NJBIA President & CEO Michele Siekerka said in a statement issued after the Senate vote.
“We applaud the Legislature for working toward a budget that is by-and-large an improvement from what it was handed in February. But at the end of the day, there is another structural imbalance, more than $700 million in additional, last-minute spending and hundreds of millions of dollars in tax increases – particularly for the business community - for one of the highest-taxed states in the nation.”
Highlights of the budget include a full $7.2 billion payment for public workers’ pensions, $12 billion for K-12 school aid, and the restoration of $20 million the governor had cut from operating aid for community colleges.
Lawmakers nixed the governor’s plan to raise $20 million with a per-truck warehouse tax, and they also declined to go along with his $18.5 million proposal to raise liquor taxes by 10%. Lawmakers approved the governor’s proposed tax increases on cigarettes and nicotine products but opted for a lower tax rate (19.75%) for online wagering wins than the governor had originally sought (25%).
The proposed increase in the realty transfer sought by the governor was reduced to 2% for sales worth between $2 million and $2.5 million and will increase a half-percentage point for every additional $500,000 in value up to a cap of 3.5% at $3.5 million. The fee would apply to sellers, not buyers, of properties.
Overall, the budget increases state spending by 4% and includes a $1.5 billion gap between the revenues the state expects and the amount of money it will spend in FY26. Siekerka said this structural deficit is something that must be addressed.
“Obviously, we didn’t get here overnight with a budget that has grown nearly 70% under Gov. Phil Murphy,” Siekerka said. “But it is high time our policymakers look forward with a new approach under a new administration, no matter who our next governor is.
“As stated in our 2025 Blueprint for a Competitive New Jersey, we need structural reforms for our pension and benefits systems. We need more pro-growth spending and fewer one-time gimmicks that give no bang for the buck,” Siekerka said.
"We need budget policies that make New Jersey more competitive and less anti-business. And we need an improved and more transparent process for how our budget is finalized.
“Absent any of this, New Jersey will continue its solemn march toward a fiscal cliff, with more residents unable to afford to live, work and play here and more businesses unable to sustain or grow. We can do better. In fact, we need to,” she said.
This story was updated at 6 p.m., June 30 with the Assembly vote.
