N.J. approves the largest spending plan in state history. Here are the key takeaways

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New Jersey lawmakers passed a comprehensive package of legislation late Friday afternoon, enabling Gov. Phil Murphy to sign a new state spending plan into law.

The $56.6 billion budget, the largest in state history, includes a 2.5% corporate transit fee tax on roughly 600 of the state’s most profitable businesses, retroactive to the beginning of the year. The money will go to support NJ Transit.

“The fee will make our public transit system more reliable, more dependable, and more accessible for working New Jerseyans,” Murphy said.

Increasing the state sales tax from 6.625 to 7% was considered as one way to fund mass transit, but in the end, that proposal was shelved in favor of the transit fee. Business leaders insist it will hurt the Jersey economy, but several consumer groups, including New Jersey Policy Perspective, support the move.

The budget also includes $2 billion for the ANCHOR tax relief program for homeowners and renters, and more than $200 million for the Stay NJ program, designed to cut property taxes in half for seniors starting in 2026.

“This is a budget that will put the needs of our families ahead of the wants of special interests, and it will start by providing yet another round of record high tax relief to our state’s working- and middle-class families,” Murphy said.

The new budget also provides “the single largest investment into our state’s public education system in our history, so it can remain the envy of the nation,” Murphy said.

Garden State schools will share $12 billion in aid, although some districts will see their funding decreased because of the complicated and often criticized state funding formula. A $7 billion payment to New Jersey’s public-worker pension fund is included in the budget, along with more than $6 billion for the surplus fund.

“With this budget, we’re going to make life more affordable for more families,” said Murphy. “We’re going to create new economic opportunities for our workers and our local businesses.”

The budget includes money to expand affordable housing options, and additional funds to help unhoused veterans. “Our budget will also help bring down the cost of goods and services that every family relies upon, like housing, health insurance, prescription drugs and pre-K,” Murphy said.

Other key takeaways:

The state continues to promote the use of electric vehicles, but the new budget calls for people who buy an EV to pay half of the regular state sales tax this year, and the full sales tax beginning next summer.

Earlier this year, Gov. Murphy had proposed increasing fees for gun permits, but during negotiations with lawmakers, that idea was dropped.

To ensure a quick approval by the Democratic majority on Friday, the budget includes nearly three-quarters of a billion dollars in “Christmas tree” items for various pet projects for different lawmakers.

Murphy said some are unhappy the state is spending more than it is taking in. “We’re still in a fragile post-COVID phase. We are doing this deliberately; we want to jump-start and make sure that the economy gets back on its feet,” he said.

Republicans and a few Democrats complained about not having enough time to review and consider all of the major items contained in the budget, but the governor said 98% of the spending plan that has been adopted was laid out back in February.

“Yes, the end comes fast, this happens every year, I think we’re all hoping to have more of a runway, a longer period of transparency around that last 2%, but one thing leads to another and that historically hasn’t been the case,” he said.