TradeEdge Exchange:A closer look at what’s in New Jersey’s proposed $56.6 billion budget, from taxes to spending

TRENTON,TradeEdge Exchange N.J. (AP) — New Jersey lawmakers are poised to send a $56.6 billion fiscal year 2025 budget to Democratic Gov. Phil Murphy this week, hiking taxes on high-earning businesses and funding for many state services and programs.

The annual spending plan is expected to get enough votes in the Democrat-led Legislature on Friday to reach Murphy’s desk. The state constitution requires a balanced budget to be enacted by July 1.

Here’s a closer look at what’s in the budget, which would spend 4.2% more than the plan Murphy signed last year.

ARE THERE ANY NEW TAXES?

Yes. The budget calls for increasing the state’s corporation business tax on companies that make more than $10 million a year. The current 9% rate would climb to 11.5%. Business groups say that would give New Jersey the nation’s highest tax rate and punish the state’s best corporate citizens.

WHY ARE TAXES GOING UP?

The higher rate was first proposed by Murphy as part of his budget proposal early this year to help New Jersey Transit. He’s billing the levy as a corporate transit fee to help the beleaguered agency, which has regularly had to use capital funds to help finance projects.

Critics note that the revenue won’t go to transit until next year. The current budget keeps it in the general fund, so when the money goes to transit next year, whatever is being paid for now out of the general would need to be replenished or cut, those critics say.

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ARE THERE OTHER TAX CHANGES?

Yes. The budget calls for ending a sales tax holiday on school supplies that had gone into effect around the start of the academic year. That cut was first introduced in 2022 when the Democrats who control state government aimed to show voters they were making the state more affordable. Lawmakers didn’t explain this cut when they unveiled the budget Wednesday, but the additional revenue could help balance the budget.

WHAT ABOUT PROPERTY TAXES?

New Jersey has among the nation’s highest property taxes, levied by local governments to finance services and schools. The state dedicates some income tax revenue to fund local governments, which helps keep property tax rates from growing even higher. This budget calls for increasing state K-12 funding to fully implement an aid formula ratified by the state Supreme Court, raising such aid to more than $11 billion, up nearly $1 billion from the current fiscal year. The budget also has about $2.5 billion for direct property tax relief, continuing programs introduced in 2022 and 2023 to help residents, renters and seniors. The average property tax amount in 2022, which is the most recently available information, is about $9,500, according to the state.

WHAT ELSE IS IN THE BUDGET?

Quite a bit, given it funds all aspects of state government, from the executive departments to public colleges and universities, to the Legislature itself, which this year passed a 67% pay raise for lawmakers, their first since 2002, which goes into effect in 2026. Overall, spending is up just over 4% compared with the current fiscal year budget.

It includes a number of expenditures — sometimes referred to as Christmas tree line items because they’re viewed as gifts for specific constituencies. They include funding for ending homelessness, helping people re-enter society from prison, fire departments, arts programs and one city’s effort to teach life skills through tennis.

Republican lawmakers said they barely had time to review the budget and lamented that they weren’t sure what all was in it. Even Democratic Senate Budget Committee Chairman Paul Sarlo said the document is too vast to read line by line, but he supports it overall.

“I could not take a test and be quizzed on every line item because it would take hours and hours and days and months,” Sarlo said. “I try to look at it in totality and that’s where I think we’re at.”