Lawmakers in New Jersey approved the State’s 2026 fiscal plan on June 27th, shortly before the deadline set to expire. New Jersey Governor Phil Murphy’s $58.8 billion FY26 budget will fund a wide range of grants, construction projects, and state services, as well as finance debt accumulated through capital projects.
A particularly notable feature of this year’s budget is its whopping $6.3 billion surplus, roughly 15x the budget surplus that Governor Murphy inherited after taking office. In addition to “reducing the structural deficit,” Murphy’s administration claims the extra funds will ensure that the next administration is able to maintain current funding without “draconian budget cuts.”
In an interview with NJ.com earlier this year, Governor Murphy alluded to a potentially large budget surplus in response to the federal government’s funding freeze, which he claims could cost the state over $27 billion.
With primaries at an end, the race for governor has only just begun. New Jersey is a historically blue state with a strong Democratic base, but President Trump’s landslide victory in November ensures that nothing is off the table. Jack Ciattarelli, the Republican primary winner who has made inroads with moderate Democrats and independent voters concerned with the State’s rising cost-of-living, received President Trump’s endorsement and is an ardent supporter of his agenda.
Meanwhile, the Democrats’ nominee for governor, Representative Mikie Sherrill, who voted to impeach President Trump in both 2019 following allegations of a quid pro quo with Ukrainian President Volodymir Zelensky and again in 2021 for his alleged role in the January 6th Capitol Insurrection, recently suggested she would vote to impeach Trump a third time.
Should New Jersey’s governor prove oppositional to President Trump’s agenda, there is little doubt that he would take action against the State’s administration and freeze federal funding and grants just as he has done with other states. But besides the $6.3 billion surplus, here’s a quick look at the massive budget laid out by Democrats for 2026.
Tax Relief
Roughly half of the FY2026 budget is meant to support direct and indirect property tax relief for nearly 1.4 million homeowners and over 700,000 renters through the State’s ANCHOR Program, providing “more property tax relief to the people of New Jersey than any administration in history.”
Additional property tax relief has been afforded to over 400,000 senior homeowners through the Stay NJ Program and will support payments up to 50% of the amount owed, or up to $3,250. Other tax relief measures include over $750 million through the State’s Child Tax Credits and Earned Income Credit, as well as a new sales tax exemption for cribs, formula, and other baby supplies.
Education
The budget boasts “the single-largest investment into New Jersey’s public education system in [the] State’s history.” Funding includes more than $3 billion for higher education and financial aid programs, including a $117 million allocation for New Jersey’s Community College Opportunity Grant (CCOG) and the Garden State Guarantee (GSG).
Murphy’s administration became the first in the State’s history to fully fund primary and secondary public education in 2025, and this budget will maintain that funding through the 2026 fiscal year. Since Murphy took office in 2018, total spending on school aid in New Jersey has increased by 48%, reaching $12.1 billion this year.
Healthcare
NJ FamilyCare, the State’s Medicaid program with nearly 2 million recipients, half of whom are children, will receive $6.3 billion in funding, and state hospitals are poised to receive roughly $3.5 billion in direct subsidies, an increase of nearly $3 billion from 2018.
Over $770 million in State and federal funds have been invested in New Jersey’s child care system, and $50 million has been allocated for reproductive health programs, including Family Connects NJ, a program that provides in-home visits for newborns. This allotment also includes incentives for OB/GYNs to move to New Jersey and provide health care “without oppressive government restrictions.”
The budget also includes $61 million for prescription drug assistance programs for seniors, as well as nearly $250 million for medical debt forgiveness and relief programs.
Mental Health & Social Services
Since Murphy took office, the State has opened over 40 harm reduction centers through the Opioid Recovery and Remediation Fund, with at least one center operating in every county, and overdose deaths across the State have steadily fallen over the past three years. The budget also funnels over $400 million towards operating the State’s four psychiatric hospitals.
The State has raised an estimated $90 million in tax revenues generated from cannabis sales in 2024 alone, which will be used to support youth mental health and drug prevention programs. $43 million will go to the NJ Statewide Student Support Services network, which provides a range of group and individual mental health treatment programs across 500 schools and supports nearly half a million students and staff.
The Murphy Administration has projected revenues to reach upwards of $56 billion in FY2026, a 3.5% increase from last year. These are just a few key takeaways from the Murphy Administration’s budget. For more information, the State provides an in-depth briefing on its website here.
