The governor wouldn’t give particulars about what to expect in her upcoming fiscal plan but instead said she is “setting the table so people can anticipate that this is going to be a tough budget season.”

What does a structural deficit mean for New Jersey taxpayers?

A structural deficit, simply put, means New Jersey spends more than it earns.

Among the costliest tax relief programs in the state’s history, Stay NJ was introduced legislatively in the run-up to the fiscal year 2024 budget and received funding for three years without paying anything out.

The first Stay NJ checks are being sent out to qualifying New Jersey seniors, but the accumulated $1.2 billion covers only the first six months of the program for this year. Roughly $900 million will need to be added to the line item in Sherrill’s first fiscal plan to maintain the program.

The law that created Stay NJ requires full pension payments, full school funding payments and a surplus of at least 12% to be built into the budget as prerequisites for funding the program. The surplus was not 12% when the budget was signed during the last two years, but budget language allowed for a work-around.

Sherrill would not commit to requiring the prerequisites before she would be willing to sign a budget bill in late June.

Increasing costs for the State Health Benefits Program, which is already a contentious topic, could also be a concern for the new governor, as payments are about $2 billion annually and the 10% increase needed in this year’s budget added more than $180 million.

Earlier: NJ faces a ‘serious structural deficit.’ What does that mean?

How does New Jersey’s budget process work?

New Jersey’s $58.8 billion budget for fiscal year 2026 is the largest in history and is set to expire at the end of June.

The plan for fiscal year 2027 — which will run from July 1, 2026, through June 30, 2027 — is a major factor in how New Jersey state government will function by dictating which state departments and programs are funded.

After Sherrill’s address in March, her proposed spending and revenue plan will be analyzed and shaped in the Legislature through the spring. Negotiations will heat up as the current fiscal year winds to a close in June. If the budget cycle is normal, a final budget bill will land on Sherrill’s desk hours before the current fiscal year ends at 11:59 p.m. on June 30.

Though it would be unlikely — given Democratic control of both chambers of the Legislature and the governor’s office — in the event the budget bill does not get signed, state government shuts down. There have been two shutdowns in state history: for 10 days in 2006 and three days in 2017.

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