Sherrill touts smaller structural deficit, record school funding, and expanded tax credits. Critics question last-minute budget negotiations, Stay NJ changes, and state’s long-term fiscal outlook

Gov. Mikie Sherrill on Tuesday signed New Jersey’s $60.7 billion fiscal year 2027 budget into law, calling it an affordability-focused spending plan that delivers record property tax relief, historic investments in education, a sixth consecutive full pension payment and new investments in children, housing and transportation while avoiding tax increases on individual residents.

The budget, approved by the Legislature just before the constitutional June 30 deadline, includes more than $4.1 billion in property tax relief, expands the state’s Child Tax Credit by 25%, fully funds the state’s pension system with a $7.3 billion payment, and maintains a surplus of just over $6 billion. The administration said it also cuts New Jersey’s structural deficit to $1.35 billion, less than half the more than $3 billion deficit projected when Sherrill took office in January.

In a signing statement accompanying the bill, Sherrill said the budget reflects months of negotiations with legislative leaders.

“After many months of negotiations, we have crafted a fiscally disciplined budget that provides record-breaking levels of property tax relief, protects our children’s futures through record education funding, delivers a full pension payment, improves accountability, and supports significant investments in the economy, workforce development, and public health and safety,” Sherrill wrote.

She also used her line-item veto authority to make what she described as technical changes.

“I am making minor changes to the bill before me to ensure consistency with legislative intent concerning the State’s spending plan for Fiscal Year 2027 and to avoid falling out of compliance with federal laws that prevent the State from increasing the value of the State Directed Medicaid Payment Program,” she wrote.

Sherrill frames budget around affordability

Sherrill said the budget fulfills her campaign promise to make affordability the central focus of state government.

“When I took office, I promised New Jersey families that affordability would be the north star of every decision we made. With the passage of our first budget, we are delivering on that promise,” Sherrill said in a statement. “It is an affordability budget that takes on the rising costs of housing, health care, and property taxes while standing up to Trump’s chaos and cuts.”

“It is the most fiscally responsible budget in years,” she said. “It cuts our structural deficit in half and puts us in a stronger position for the future without raising taxes on individual New Jerseyans. This budget reflects our values, protects our future, and ensures doors to opportunity remain open in New Jersey.”

State Treasurer Aaron Binder said the spending plan maintains fiscal discipline while preserving major state priorities.

“This budget demonstrates a steadfast commitment to fiscal discipline, maintaining a full pension payment, responsible surplus, and support for shared priorities like property tax relief and school funding,” Binder said. He thanked lawmakers, Treasury staff, the Office of Legislative Services, and members of the public “who shared ideas that helped shape the final budget.”

Stay NJ revised

Among the most significant changes is a restructuring of the Stay NJ property tax relief program.

The budget lowers the program’s income cap from $500,000 to $200,000 and creates three benefit tiers. Seniors earning $100,000 or less will remain eligible for the maximum annual benefit of up to $6,500. Those earning between $100,001 and $150,000 can receive up to $5,000, while households earning between $150,001 and $200,000 can receive up to $4,000. Qualifying homeowners will continue receiving property tax relief totaling up to half their property tax bill, subject to those caps.

Overall, the budget includes more than $4.1 billion in property tax relief, including $2.186 billion for ANCHOR, $756 million for Stay NJ, and $345 million for Senior Freeze.

The Child Tax Credit also increases by 25% for tax years 2026 through 2028. Families previously receiving the maximum $1,000 credit will now receive $1,250, while households qualifying for the $800 credit will receive $1,000. The administration estimates that about 217,000 tax filers with children will benefit.

Education, transportation, and housing

The budget provides a record $12.4 billion in K-12 education aid, more than $370 million above last year’s level, along with a record $1.4 billion for preschool education. It also includes $582 million for child care assistance, restores $20 million for Summer Tuition Aid Grants, doubles funding for high-impact tutoring to $15 million, and provides funding for several youth mental health initiatives, including a new Office of Youth Online Mental Health Safety and Awareness and a Social Media Research Center.

The budget provides nearly $1.1 billion in operating support for NJ Transit, including $765.6 million from the Corporate Transit Fee, and about $2.1 billion for transportation capital projects, including highways, bridges, and transit infrastructure.

The budget also increases funding for first-time homebuyer down payment assistance, homelessness programs, veteran housing initiatives, and affordable housing construction, while fully funding NJ FamilyCare with $6.9 billion in state support.

Legislative leaders praise budget

Senate President Nick Scutari said lawmakers “made affordability our top priority by delivering record property tax relief, expanding the Child Tax Credit for working families, and strengthening support for children’s mental health services.”

Assembly Speaker Craig Coughlin said the budget “delivers for New Jersey families” by maintaining a healthy surplus, reducing the structural deficit and preserving Stay NJ “so that homeowners can count on that benefit being there for them.”

Senate Majority Leader M. Teresa Ruiz said the spending plan “lays the foundation for a stronger future rooted in fiscal discipline, expanded opportunity, and the belief that every New Jerseyan can thrive.”

Assembly Budget Chair Eliana Pintor Marin said the budget “reflects what responsible governing looks like,” citing the full pension payment, expanded Child Tax Credit, record education funding and continued investments in nonprofit organizations and children’s mental health.

AARP criticizes Stay NJ changes

AARP New Jersey praised several affordability initiatives but said lawmakers broke a promise by reducing this year’s Stay NJ benefits.

“As older New Jerseyans continue to face rising costs for housing, utilities, health care, property taxes, and other everyday essentials, making our state more affordable remains critically important,” said AARP New Jersey State Director Chris Widelo.

“While the FY27 budget includes several important investments that support older adults, we are disappointed that it falls short of maintaining the full Stay NJ property tax relief benefit that older New Jerseyans were promised for 2026.”

Widelo said the budget imposes “a 25 percent reduction in this year’s Stay NJ benefit across the board, rather than maintaining the maximum benefit for those who need it most.”

“Many older homeowners have already planned their household finances around the expectation of receiving the full benefit,” he said. “Receiving less relief than promised will make it harder for many New Jerseyans living on fixed and moderate incomes to keep up with rising costs.”

The AARP also criticized the budget process itself.

“We are also disappointed by the lack of transparency surrounding the final budget negotiations,” Widelo said. “Initial public reports suggested a different outcome for Stay NJ than what ultimately appeared in the budget language, which was released only shortly before lawmakers voted. Older New Jerseyans deserve a transparent budget process and a clear understanding of changes that directly affect their finances.”

At the same time, Widelo praised lawmakers for preserving ANCHOR and Senior Freeze, maintaining funding for prescription drug assistance through PAAD and Senior Gold, fully funding the pension system, preserving Home and Community-Based Services rather than shifting money to nursing homes, maintaining the $95 minimum SNAP benefit and providing the final year of funding for RetireReady NJ.

“The conversation about Stay NJ is far from over,” Widelo said. “While the budget agreement restores the maximum benefit for eligible homeowners beginning in 2027, older New Jerseyans deserve certainty — not shifting promises that make it difficult to plan their finances.”

Policy group praises reforms but faults process

New Jersey Policy Perspective praised several policy changes while sharply criticizing both the budget process and the state’s long-term fiscal outlook.

“Governor Sherrill’s first budget gets some important things right: reforming Stay NJ, closing corporate loopholes, and expanding the Child Tax Credit,” NJPP President Nicole Rodriguez said. “Each of those required real political will, and that should be acknowledged.”

But Rodriguez said the process behind the budget looks much like the one New Jerseyans have watched for years.

“Agreements reached behind closed doors, spending decisions made with no public input, and a final document lawmakers and residents had little time to review before a vote,” she said. “That falls short of the transparency Governor Sherrill promised.”

Rodriguez also warned that the state has not adequately prepared for potential federal spending reductions.

“Washington is shifting billions of dollars in costs onto states and putting programs families depend on at risk, yet this budget does too little to prepare New Jersey for the fiscal and human toll of those federal cuts,” she said. “That is a missed opportunity to shore up the state’s finances and protect residents before harder budget choices are made.”

Rodriguez also questioned a new health insurance assessment requiring employers to ask workers whether they or family members are enrolled in Medicaid, saying it “raises real privacy concerns and risks enabling discriminatory hiring or employment decisions.”

She noted the budget still leaves “a $1.4 billion structural deficit” and criticized “about $400 million in legislative add-ons” approved “without any public accounting of where that money is going.”

Peter Chen, a senior policy analyst with NJPP, praised lawmakers for restructuring Stay NJ to target benefits toward lower- and moderate-income homeowners.

“These much-needed reforms will prevent the state from sending tax relief to very-high-income households, while focusing the benefit on less wealthy seniors,” Chen said. “By adopting measures that focus aid on low- and moderate-income seniors, the bill creates a more progressive structure, directing more money to those who need it most.”

But Chen said the program continues to overlook renters.

“Senior renters are more likely to be housing insecure due to rent increases and eviction, and are also more likely to be low-income and Black or Hispanic/Latinx,” he said. “Given the state’s rising rents and housing costs, the program’s renter gap is a real problem.”

Chen also questioned the program’s long-term sustainability, noting that even after the reforms, Stay NJ is expected to cost more than $740 million annually, while the state continues to face a structural deficit.