Gov. Phil Murphy proposes new NJ Transit funding, tax relief in budget address

A new funding source for New Jersey Transit, investment in tax relief and an affordable housing initiative are among the notable proposals in Gov. Phil Murphy’s $55.9 billion budget.

During his seventh annual address Tuesday afternoon, the governor said that his proposed budget — for the state's 2025 fiscal year — was crafted help make New Jersey more affordable for families.

“At a moment of economic uncertainty and unease, how do we — as a state — move forward?” Murphy said. “New Jersey is prepared to face our challenges — confidently, capably, and ambitiously. And we are prepared, because over the past six plus years — together — we have restored fiscal responsibility while remaining true to our values.“

Revenues are a challenge — as are NJ Transit's finances

The record-setting spending plan comes at a time when revenues are more than half a billion dollars below what has been previously projected and the state’s public transportation system faces a fiscal cliff.

NJ transportation: To fix NJ Transit budget woes, Murphy proposes new corporate tax

The budget for fiscal year 2025, which covers spending from July 2024 through June 2025, is $1.6 billion higher than the 2024 plan.

Murphy said that the investments in his proposed budget are expected to help working class families and traditionally underserved communities.

“With our budget, we will make life more affordable for more families. We will continue meeting our sacred obligations — from fully funding our public schools, to fixing NJ TRANSIT once and for all,” he said. “We will create a new generation of economic opportunities in the industries of the future. We will maintain fiscal responsibility, while staying true to our values — so New Jersey is prepared for the challenges of tomorrow.”

The budget structure faces some concern as spending is higher than incoming revenues but administration officials said that the proposed budget maintains programs while capping other discretionary spending.

NJ budget: Gov. Murphy wants to give money to build affordable housing in NJ backyards and basements

The governor’s proposal is just a starting point for the monthslong process that is likely to be heated as Republicans call for less discretionary spending and more transparency on budget resolutions.

Senate Minority Leader Anthony Bucco called the budget proposal “more of the same” and said that it “continues to spend more than the state takes in” while Assembly Republican Leader John DiMaio said that it doesn’t “get back to the basic needs” of the state.

State Sen. Declan O’Scanlon, who serves as Republican Budget Officer in the upper chamber called it a “typical speech by a governor saying all kinds of wonderful things.”

“History is going to judge this administration as one of the tragically missed opportunities,” he said before noting that the budget includes spending down of the surplus and cutting state aid to school districts.

Murphy is in the last two years of his second term and will have to negotiate with current lawmakers for the rest of his time in office. Negotiations during the process became contentious — as they were last year, when the Stay NJ program — a tax relief initiative geared toward keeping seniors in the state — was first proposed by legislators. Administration officials were even said to be preparing shutdown contingency plans before an agreement was reached and the budget was signed with no significant issues

The Legislature will take Murphy's proposals into consideration before introducing its own budget bill in the coming months. Murphy must sign a final budget before July 1.

Here are some of the most notable priorities Murphy discussed Tuesday:

NJ Transit

The cornerstone of Murphy’s proposed budget is a new corporate transit fee that would dedicate a new source of funding to NJ Transit and help plug fiscal cliffs predicted in the coming years.

The fee would apply to corporations with net annual incomes of more than $10 million in New Jersey that Treasury officials estimate is about 600 companies and would have a retroactive effective date of Jan. 1, 2024.

Those companies would pay a 2.5% fee on their total profit when it is more than $10 million, going back to the first dollar earned. The estimated revenue for the 2025 fiscal year would be $1.023 billion because it would be retroactive to January 2024. The estimated revenue for fiscal year 2026 would be $859 million, down from about $1 billion collected from the corporate business tax surcharge, a fee charged to businesses that earned more than $1 million and expired at the end of 2023.

Transit advocates have spent the last year or more supporting a corporate tax that could be dedicated to NJ Transit with many calling for the renewal of the corporate business tax surcharge which brought in about $1.1 billion each year.

In addition to the proposed corporate transit fee, Murphy’s budget would provide NJ Transit with $670.1 million in state assistance for its $3 billion operating budget from the general fund, New Jersey Turnpike Authority and Clean Energy Fund, up from last year’s $652.1 million.

The state Transportation Trust Fund, which is set to expire in June, is not addressed in Murphy’s proposed budget. The TTF had previously expired in July 2016 when the Christie administration and the Legislature couldn’t come to an agreement for about four months over how to renew the fund, which stalled infrastructure projects at the Department of Transportation and NJ Transit. Ultimately, a resolution was negotiated.

A fix?: Gov. Phil Murphy proposes new NJ Transit funding, tax relief in budget address

Earlier: NJ Transit board approves $54 million for HQ move, but still no solution for fiscal cliff

NJ schools: The next generation

The 2025 fiscal budget includes the final year of phasing in the S2 school funding formula and provides $908 million more in school aid to districts throughout the state. This is the bulk of the proposed budget’s new spending.

The proposed budget includes an additional $124 million for preschool education; $20 million of that would be for expansion in new districts to create more than 1,000 new seats.

There are a handful of additional programs to benefit children as well. More than $100 million will be used for the Cover All Kids health coverage program as well as $30 million for school meals.

Murphy’s proposed budget includes a $2.5 million literacy screening grant program to help districts to get resources to the kids that need them most.

Funding: Murphy's NJ budget for 2024-25 'fully funds' K-12 schools, sets aside money for literacy

NJ affordable housing

While legislation that would rework how towns decide where to zone for affordable housing that had been originally introduced during the waning days of the last Legislature’s lame duck session is still making its way through committee, the governor’s proposed budget would support existing programs to expand affordable housing.

The Affordable Housing Trust Fund will be used alongside federal funds to help homeless veterans find stable housing. About $15 million from the fund will also be used to support the Homeownership Opportunity Development program and the Low-Income Homeownership Rehabilitation Fund.

Another $32 million will also be allocated for down payment assistance and $10 million will be committed through the Department of Community Affairs to incentivize municipalities to create new affordable accessory dwelling units.

Accessory dwelling units: Gov. Murphy wants to give money to build affordable housing in NJ backyards and basements

Affordability

Housing isn’t the only way Murphy hopes to make the state more affordable. Several tax relief programs are being renewed in his proposed budget.

ANCHOR will receive about $2.3 billion in its third year, riding high on a successful second payout that made it the largest property tax relief program initiative in state history.

The StayNJ program, which grabbed attention as the 2024 budget was wrapped up, will get another $200 million set aside. The program received $100 million last year and isn’t set to go into effect until 2026. The law does have a caveat about funding the program — a surplus of 12% is needed, which is something the proposed budget does not have.

Murphy also proposed funding for RetireREADY NJ, a state-sponsored retirement savings program for private sector employees. It’s run by an executive director and a board which are already looking for New Jersey employers who would like to participate in the pilot launch.

What you need to know: New Jersey Senior Freeze Program 2024

Taxes: NJ tax relief totaling $3.5 billion expected in Phil Murphy's 2025 budget address

New Jersey's workforce

Murphy included a full pension payment for the fourth year in a row for retired members of the state’s workforce. That payment of $7.162 billion would be $1.1 billion if the state hadn’t skipped payments.

There is also funding for a slew of other programs geared toward getting people involved in industries that are facing staffing shortages now.

The governor’s proposed budget includes $10 million for student teacher stipends as well as $5 million for a teacher loan redemption program. There is also $7 million for a behavioral healthcare provider loan redemption program.

A new nursing workforce initiative will see $5 million in investments with $213,000 for the Family Connects NJ Nurse Tuition Assistance Program, $1.8 million for the Pay It Forward program, $1 million for nursing faculty loan redemption expansion and $2 million for the primary care practitioner load redemption program.

The governor also proposed $10 million for firefighter grants.

New strategy: Murphy to fund single-patient rooms at NJ vets homes

Surplus and future funding

The governor’s proposed budget includes a surplus of $6.1 billion or about 11% of the total budget. That money can be used to keep the government up and running and provide money in the bank in case tax revenues fall short of what is anticipated.

Though economic forecasters expect what would be considered a “soft landing” for the economy, revenue updates for the fiscal year 2024 budget show a decline in revenue of about $503 million.

Katie Sobko covers the New Jersey Statehouse. Email: sobko@northjersey.com

This article originally appeared on NorthJersey.com: NJ Transit gets new funding proposal in Phil Murphy budget address