N.J. Gov. Mikie Sherrill proposes record $60.7B budget, highlights property tax relief, increased education spending

From Camden and Cherry Hill to Trenton and the Jersey Shore, what about life in New Jersey do you want WHYY News to cover? Let us know.

Gov. Mikie Sherrill unveiled a $60.7 billion state spending plan Tuesday.  It’s the largest budget proposal in the Garden State’s history. Last year’s state budget was $58.8 billion.

New Jersey is facing a $3 billion budget gap. Sherrill said her proposal fully funds the state pension system and includes nearly $2 billion in cuts while not raising taxes on state residents.

Presenting the proposal to state Legislature, she described her spending proposal as “the most fiscally responsible budget that our state has seen in years.”

Tax relief

Sherrill said she is proposing to tweak New Jersey’s Stay NJ program, which cuts property taxes for homeowners 65 and older. She said the program needs to be adjusted, because right now it benefits households with an annual income of $500,000.

“I’m changing that, to safeguard Stay NJ for middle-class seniors. If you make $250,000 or less, your tax relief is in this budget,” she said. “That’s going to save taxpayers hundreds of millions of dollars a year.”

The governor said her budget also includes additional relief for low- and middle-income senior renters through the ANCHOR property tax relief program, but she did not offer specifics.

Sherrill is also seeking to cap corporate tax deductions that high-earning companies can take for net operating losses, and wants to limit the Alternative Business Calculation, a deduction introduced 15 years ago to help small businesses weather the Great Recession.

She said these proposed changes will reduce the state’s structural deficit by $1.2 billion.

Assembly Republican conference leader Christopher DePhillips expressed disappointment that the budget is 3.2% higher than last year’s spending plan.

“Where are the cuts in her budget? The budget, once again, just like the last eight years, increase after increase after increase,” he said. “The area where we want to see cuts is in tax cuts. She could have gone further to cut the sales tax rate, she could have gone further to cut the corporate business tax rate. That would bring relief, that would help affordability.”

Here are some highlights of Sherrill’s first budget:

Education

Sherrill wants to invest $22.5 billion in funding for the state’s pre-K through 12 schools. Her administration is earmarking:

• $12.4 billion for school formula aid, the largest amount in state history
• $1.4 billion for preschool education aid, a 9% increase over last year’s budget
• $33 million for a new youth mental health initiative called School-based Partnerships for Access and Resilience for Kids
• $500,000 for a new social media research center at one of New Jersey’s institutions of higher education

Housing

The governor said her spending plan includes $70 million for the Affordable Housing Trust Fund. The fund increases down payment support for first-time home buyers. She said this year, New Jersey also intends to end veteran homelessness, with the budget calling for $11 million to support the state’s Bringing Veterans Home program.

“It helps us to brace for the impact of federal cuts to emergency housing programs, expanding our work to end homelessness,” she said. “And it supports programs to get vets into permanent housing.” ”

Investing in government efficiency

An additional $13.3 million in the proposed budget would go to the New Jersey Innovation Authority to modernize how residents and businesses interact with government through an online dashboard and a state report card. Sherrill said this will help to cut bureaucratic red tape.

Sherrill said almost 500,000 New Jerseyans will see their health care premiums triple this year, and an estimated 300,000 state residents will lose their Medicaid coverage because of the loss of Affordable Care Act credits.

Instead of asking taxpayers to foot that bill, this budget looks to large employers for assistance, she said.

Sherrill said state leaders must no longer take on what she described as “last- minute giveaways” in the budget.

“For example, in the final working days of the last administration, New Jerseyans were stuck with nearly $3 billion in extra spending – $2.5 billion in corporate tax breaks and $240 million in giveaways,” she said. “That can’t happen. We can’t afford that process anymore. It’s not accountable; it’s not efficient; it’s not what the people of New Jersey deserve.”

The proposed spending plan also includes money for:

• Programs such as Comfort Partners and the Community Solar Energy Program to protect lower-income residents from utility cost increases.
• Programs to develop new power generation and solar storage for downward pressure on electricity prices.
• Establishing two new regulatory review teams at the Department of Environmental Protection to reduce permitting process and construction backlogs and delays.
• Expanding the Department of State’s Business Action Center to help businesses navigate the permitting and licensing process and access needed capital.

Sherrill also pledged to support legislation that would reform prescription drug costs by limiting the actions pharmacy benefit managers can take.

The governor’s budget plan calls for using $1.8 billion from the state’s $7.2 billion surplus during the new fiscal year, which begins July 1.

“Reality is forcing us to change not just the way we do our budget, but how we approach our work. It’s asking us to make hard choices, for the sake of a better future,” she said. “One of the best things about New Jersey is that when we’re called to it, there’s no challenge we’ve backed away from. I’m in this with you for the long haul.”

DePhillips said Sherrill could have introduced more spending cuts.

“I think she just punted to the Legislature in her speech, and said ‘Fix pork barrel spending. Let me know what you think about cuts, I’ll think about it,’” he said. “She certainly could have included more dramatic cuts in her budget.”

The state’s looming budget shortfall stems from a projected loss of more than $3 billion in federal Medicaid funding in the coming years and the expiration of $6 billion in pandemic relief from the American Rescue Plan Act.

Sherrill, who was sworn into office this year, repeatedly promised to address the shortfall by cutting programs and services rather than raising taxes.