Budget Overview
Total FY2027 Appropriations
The FY2027 budget recommends total appropriations of $60.7 billion, an increase of $979.8 million (1.6%) over FY2026 adjusted appropriations of $59.7 billion.
Total Anticipated Revenue
Total revenues projected at $59.1 billion, an increase of $1.6 billion (2.7%) over FY2026. Growth driven by gross income tax and sales tax, partially offset by declining non-tax revenues.
Spending Reductions
The budget includes nearly $2 billion in spending cuts. Governor Sherrill describes these as "tough, but necessary" choices to address structural challenges that have grown year after year.
How the Budget Breaks Down
| State Aid (school & municipal aid) | $24.4B (40.2%) |
| Grants-In-Aid (services for residents) | $20.8B (34.3%) |
| Executive Operations (running government) | $5.4B (8.9%) |
| Debt Service | $3.2B (5.3%) |
| Capital Construction | $1.9B (3.2%) |
Full Pension Payment
Includes the full actuarially recommended pension contribution — the first full payment by a first-year governor in decades. Includes $1.1 billion from State Lottery revenue. This represents 12% of the FY2027 budget.
State Employee Health Benefits
Expected spending on health benefits for active and retired enrollees, a 10% increase from FY2026. Costs have risen approximately 84% (6% annually) since FY2017. The Governor describes these rising costs as "unsustainable."
Surplus
The projected surplus at the end of FY2027 is $5.36 billion, down from $7.26 billion at the start of the fiscal year — a decrease of approximately $1.9 billion.
Innovation & Government Efficiency
Additional funding for the NJ Innovation Authority (NJIA) to support major initiatives including the Permitting Dashboard and NJ Report Card, working with the newly established Chief Operating Officer to modernize systems and improve transparency.
Property Tax Relief
Total Property Tax Relief
Forty-seven percent of the entire FY2027 budget — $28.7 billion — supports direct and indirect property tax relief programs, including school aid, municipal aid, direct tax relief, and other local aid. This is described as a record amount.
Stay NJ Program
Expected to benefit over 440,000 seniors. The Governor proposes targeted reductions: the income threshold will be modified to $250,000 (down from $500,000), and the maximum benefit will still be 50% of property tax bills, with a lower cap of $4,000, down from $6,500. The 12% surplus trigger required by law was not met.
ANCHOR Program
Expected to provide direct property tax relief for nearly 1.4 million homeowners and over 673,000 renters. The Governor proposes maintaining the $250 ANCHOR bonus for nearly 111,000 senior renters — a bonus that would have otherwise expired after FY2026, while senior homeowners will lose the $250 bonus payment.
Direct Relief Programs
The State will allocate nearly $4.2 billion across six direct property tax relief programs and tax deductions. Over 2 million residents will receive some form of assistance.
Senior & Disabled Citizens' Tax Freeze
Eligibility expands again in FY2027. Since FY2020, the program has grown to benefit nearly 271,000 more residents.
Municipal Aid & Shared Services
Over $1.7 billion in municipal aid. Includes a $1 million increase for LEAP (total $3 million) and $5 million for consolidating public safety infrastructure. Since FY2020, 162 LEAP grants totaling $24 million have been issued. For every $1,000 in LEAP grants, government units have saved $3,000.
Education
Pre-K to 12 Total Funding
Total funding for pre-K to 12 education (including $891.8M from the Lottery Enterprise Contribution Act), an increase of $222.6 million over the prior year. Described as the highest school aid funding in NJ history.
Formula Aid
The largest amount of formula aid in state history. Maintains a 3% cap on losses and 6% cap on gains, calculates special education aid on actual enrollment, and uses multi-year averages for property wealth and income.
Preschool Education Aid
A 9.3% increase over FY2026, providing resources for nearly 300 districts with State-funded pre-K. An additional $4.5 million supports new districts. More than half of NJ school districts now have access to state-funded pre-K.
High-Impact Tutoring
Investment doubles from the prior year. Will help nearly 100 more districts and 13,500 more students. Early results show students achieving 2+ grade levels of growth in literacy.
School Construction
$350 million for the Schools Development Authority for current projects and its Statewide Strategic Plan, plus $50 million in General Fund capital grants for SDA districts.
Higher Education
Includes $530.2M for Tuition Aid Grants (TAG), $109M for College Promise programs (CCOG and Garden State Guarantee), $54.8M for Educational Opportunity Fund, $755.2M for State college operating support, $169.1M for county colleges, and $60M to offset fringe costs at research universities.
Child Care Assistance
State funds projected to support care for up to 77,500 children — 2,500 more than in FY2026. An additional $18 million in child care assistance funding is included, along with $7.5M from the Social Impact Investment Fund for child care facilities.
Family Connects NJ
An additional $12.8 million to expand the universal nurse home visiting program statewide for the first time. Since launch in January 2024, nurses have performed nearly 10,000 home visits. All 21 counties will be eligible beginning in 2027.
SPARK: School Mental Health
School-based Partnerships for Access and Resilience for Kids (SPARK) — a new statewide initiative to expand mental health services in K-12 schools. SPARK grants will support districts in building partnerships with licensed mental health providers to increase access to school-based counseling.
Health Care & Human Services
NJ FamilyCare (Medicaid)
State funding for NJ's Medicaid program, providing comprehensive benefits to more than 1.8 million residents including seniors, individuals with disabilities, low-income adults, and nearly half of the State's children. Cover All Kids covers roughly 850,000 children.
Hospital System Funding
NJ's 70 acute care hospitals will receive approximately $3.6 billion from direct subsidy programs including Charity Care, Graduate Medical Education, and the outpatient State-directed payment program. Additionally, $147 million in federal Rural Health Transformation Program funding begins deployment.
Developmental Disabilities
State spending for the Division of Developmental Disabilities increases by $154 million to meet the needs of adults in this community. Continues funding for the Office of the Ombudsman and investments in services for blind, visually impaired, deaf, and hard of hearing individuals.
Children's System of Care
Total State funding includes $513.5 million for the Children's System of Care and $39 million for school-based services. The Division of Child Protection and Permanency budget totals $1.2 billion across state, dedicated, and federal funds.
Reproductive Health Care
Maintained at $52 million for family planning services and reproductive health access. More than $30 million supports care at clinics in every county regardless of ability to pay, plus a $22 million Reproductive Health Access Fund to respond to emerging threats.
Opioid Crisis & Mental Health
Committed toward care at the State's four psychiatric hospitals. Nearly $312 million in opioid settlement resources has been advanced. The Department of Health reports opioid-related deaths declined nearly 30% between 2023 and 2024.
Aging & Senior Services
Includes $397 million in growth for NJ FamilyCare's long-term care population and $22.4 million for Pharmaceutical Assistance to the Aged and Disabled plus Senior Gold, providing prescription drug benefits to nearly 158,000 residents. RetireReady NJ continues to help workers save for retirement.
Maternal & Infant Health
Continues funding for the NJ Maternal and Infant Health Innovation Authority to advance evidence-based strategies reducing maternal mortality, infant mortality, and racial disparities. Family Connects NJ expansion (see Education section) embeds early intervention in the home.
Public Health Investments
Adds $2 million for the state-funded vaccination program, $1 million to strengthen State Public Health and Environmental Laboratories, and $5.4 million for data modernization to ensure readiness against public health threats.
Food Assistance
Includes school meals for nearly 21,000 children (Working-Class Families Anti-Hunger Act), $30.2 million to maintain a minimum $95 SNAP benefit for 40,000 households, and $85 million for food banks and emergency feeding organizations.
Youth Online Safety
Funds the Office of Youth Online Mental Health Safety and Awareness (created by Executive Order No. 6). Includes $500,000 for a new Social Media Research Center at a NJ institution of higher education. The Department of Education will work with districts to prepare for the first cell phone-free school year.
Health Insurance Marketplace
Get Covered New Jersey enrolled 509,192 residents during the most recent open enrollment. Federal elimination of ACA subsidies caused the share of residents with premiums under $10/month to drop from 48% in 2025 to 8% in 2026. A Health Insurance Strike Team has been directed to help mitigate this crisis.
Housing & Homelessness
Down Payment Assistance
Total investment up $5 million, expected to help nearly 3,000 new first-time and first-generation homebuyers. The program is described as a tool for closing the racial wealth gap and supporting generational wealth creation.
Affordable Housing Trust Fund
Diversions reduced by more than $70 million, making $30 million available for new construction. Expanding affordable housing production is intended to relieve pressure on the market and lower costs for families.
Homelessness Response
New funding for the Department of Community Affairs to expand rapid re-housing programs for vulnerable households in imminent risk of homelessness.
Bringing Veterans Home
Joint initiative by the Departments of Community Affairs and Veterans Affairs to end veterans' homelessness. Since launch in January 2025, the program has helped over 2,200 homeless veterans.
Social Impact Investment Fund
Deploying $20 million in seed funding: $7.5 million for affordable housing loans, $7.5 million for child care facilities loans, and $5 million for infrastructure loans — supporting small, minority, and women-owned developers entering the multifamily housing market.
Energy Affordability & Reliability
Rate Freeze
Pursuant to Executive Order No. 1, the State is freezing rates by offsetting increases from the most recent electricity price auction. Due to efforts to rein in PJM (the regional grid operator), the recent auction only yielded impacts of up to 2%. Without intervention, rate hikes would have been comparable to last year's, costing 67 million Americans $27 billion. The budget documents do not identify a funding source for this program.
Expanding Power Generation
The Governor is accelerating programs to develop new power generation including solar, storage, energy efficiency, and demand response. Programs include the Garden State Energy Storage Program, Competitive Solar Incentive Program, and aggregating distributed energy into "virtual power plants" to reduce peak demand.
Assistance for Vulnerable Households
Continued support for Comfort Partners and the Community Solar Energy Program. The Board of Public Utilities will be directed to issue another round of Residential Energy Assistance Payments (REAP) for lower-income residents and provide further rate relief.
Law & Public Safety
Department of Corrections
Continued investment in facility operations and successful re-entry services. Budget supports the State Parole Board, which plays an integral role in sustaining NJ's record low recidivism rates.
State Police & Trooper Class
Funds the 169th Trooper Class along with new support for body-worn camera maintenance and the P25 radio system.
ARRIVE Together Program
Partners police officers with mental health professionals when responding to a person experiencing a mental health crisis. Also continues hospital- and community-based violence intervention programs using $25.5 million from adult-use marijuana revenues.
Cannabis Market
The regulated cannabis market continues to grow with nearly 400 licensed businesses operating in over 200 municipalities. Cannabis sales are expected to produce $106 million in tax and fee revenues in FY2027.
New American Protections
Executive Order No. 12 prevents ICE from staging operations on state property. A "Know Your Rights" website was published and a portal launched for residents to submit video footage of ICE interactions. Budget supports translation and interpretation services.
Military & Veterans Affairs
Additional $10.5 million covers increased operating expenses at the State's three Veterans Memorial Homes. The new Department of Military Affairs receives $12.9 million, including $1 million for maintenance at aging armories. NJ is the country's first female veteran governor's state.
Transportation & Infrastructure
NJ TRANSIT Support
Over $1 billion in State support, an increase of $215.3 million (26%) from FY2026. Includes a $282.2 million General Fund subsidy and $765.6 million from the Corporate Transit Fee. Prevents service cuts and supports a more user-friendly mobile app. NJ Transit faces 11% operating cost increases.
Gateway Tunnel Project
The Governor is committed to advancing the Gateway Tunnel Project and fighting to ensure federal government support for NJ jobs and commuters. NJ TRANSIT continues work toward a fully modernized bus and rail fleet by 2031.
Transportation Capital Program
Includes $1.3 billion for state, local highway, and bridge projects, and $782 million for NJ Transit capital projects. Transportation Trust Fund spending increases by $60 million in FY2027.
DOT Modernization
Upfront funding for DOT to convert its financial management system to NJHIVE, the State's modern enterprise accounting platform. Will improve capacity to process more than $1 billion in annual federal transportation reimbursements more quickly and securely.
NJ TRANSIT LAND Plan
The Governor will support NJ TRANSIT's Leveraging Assets for Non-farebox Dollars (LAND) Plan, which proposes transit-oriented development and land use reforms to provide new revenue for the agency while improving housing opportunities for families.
Economy & Jobs
Small Business Support
Maintains Main Street Recovery Fund. Proposes cutting filing fees for corporations and non-profits. Additional employees for the Business Action Center (BAC) under Lt. Governor Caldwell to reach more businesses and streamline permitting/licensing.
MWBE Support
Investing in a team of experts to provide training and technical assistance to minority and women-owned businesses navigating State procurement. The 2024 Disparity Study found the procurement process does not provide adequate access for minority-, women-, and veteran-owned businesses.
Workforce Development
An additional $1 million for the Summer Youth Work Experience Program. The Governor is requesting a review of existing workforce development programming to evaluate effectiveness and align training with employer demand. Stronger partnerships among colleges, employers, and training programs are prioritized.
Major Events
Preparing to host the 2026 FIFA World Cup final, expected to attract millions of visitors. The Administration will also commemorate the nation's 250th anniversary. Significant resources directed to public safety and transportation infrastructure for these events.
NJ Economic Outlook
NJ real GDP grew 2.2% in the first three quarters of 2025. The state has 177,100 more nonfarm jobs than pre-pandemic (4.2% growth), outpacing NY (1.9%), PA (2.8%), and CT (0.9%). The unemployment rate reached 5.4% in December 2025. Median home price reached $585,000 in 2025, up 6.4%.
Environment & Agriculture
DEP Permitting Reform
Budget addresses DEP understaffing and establishes two new regulatory review teams to reduce permitting backlogs. Greater permitting capacity will expedite energy generation and housing construction, reducing construction delays and costs.
Water Infrastructure
Ten percent increase in Drinking Water and Clean Water Infrastructure funding, allowing NJ to access $265 million in federal funds. Additionally, $4.5 million available to implement the Protecting Against Forever Chemicals law (P.L.2025, c.202) and reduce PFAS discharges.
Agriculture
Total funding for the Department of Agriculture including food security. Supports food banks, school nutrition, farmland preservation programs, and expansion of responsible solar energy use on farms.
Revenue Outlook
Gross Income Tax
The State's largest revenue (~39% of total). FY2027 forecast up 2.0% from FY2026. Employer withholding has posted 5%+ growth in 7 of the past 8 fiscal years. The Administration proposes reducing the Alternative Business Calculation deduction for high-income taxpayers — affecting approximately 10,000 taxpayers (<1% of filers).
Sales Tax
FY2027 forecast represents 3.6% growth over FY2026. Consumer spending expected to remain resilient. FIFA World Cup matches and tourism-driven momentum may boost early FY2027 collections.
Corporation Business Tax
FY2027 CBT revenues projected at $4.1 billion, up 25% from a depressed FY2026 ($3.3 billion) where H.R.1 caused a sharp decline. Includes $485 million from a proposed temporary cap on Net Operating Loss deductions. Corporate Transit Fee projected at $814.4 million.
Pass-Through Business Tax (PTBAIT)
Projected to decline slightly from a strong FY2026 ($4.82B). Recent strength bolstered by robust capital markets and M&A activity. Minimal impact expected from federal H.R.1 due to expanded SALT deduction.
Casino Revenue Fund
Expected to exceed $1 billion for the first time, up $65.9 million from FY2026. Growth supported by increased internet gaming and sports wagering tax rates.
Employer Healthcare Contributions
A new charge on employers with 50+ employees on NJ FamilyCare. Average State cost for covering this population is estimated at $1,700 per person. Intended to reduce private employers' reliance on public benefits.
Revenue Strategy
The State will enhance revenues without enacting new taxes on everyday New Jerseyans. Key strategies include closing corporate loopholes, identifying tax evaders through new technology and training, and a proposed licensing system for commercial data brokers ($2.5 million in projected fees).
Federal Impact & Response
H.R.1 Budget Impact
The budget includes over $100 million to respond to H.R.1: supporting counties with new SNAP administrative costs (federal share cut from 50% to 25%, shifting $71 million burden) and maintaining Medicaid coverage for families. The downstream effects of federal cuts will ultimately reduce public health and hospital funding by an estimated $3.3 billion by 2030.
ACA Subsidy Elimination
Trump Administration actions to eliminate ACA plan subsidies caused the share of residents with premiums under $10/month to plunge from 48% (2025) to 8% (2026). A Health Insurance Strike Team has been formed to mitigate impacts.
Project for Federal Accountability
Continued support for the Project for Federal Accountability in the Office of the Attorney General. Budget funds family planning services, reproductive healthcare access, and increased investments in water infrastructure as the federal government threatens clean air and water protections.
H.R.1 Corporate Tax Effects
H.R.1 significantly reshaped the corporate tax landscape. As a rolling-conformity state, NJ automatically adopted provisions like immediate R&D expensing and expanded interest deductions, reducing CBT revenue by $883.7 million from the original FY2026 forecast. Effects expected to moderate in FY2027.
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