2021 NJ State Budget

Governor Phil Murphy has presented his Fiscal Year 2021 (FY2021) budget. Moving into the second half of his term, Murphy cited his budget as "a plan to build on the progress made by the Administration over the past two years to support New Jersey’s middle class."

Budget in Brief

The Governor’s proposed budget makes significant investments in property tax relief, health care, education, and NJ TRANSIT, while including more than $566 million in savings. According to his office: 

Governor Murphy’s budget continues to strengthen the State’s fiscal standing by working with the Legislature and partners in labor to pursue savings and restore faith in the pension system, while reducing reliance on non-recurring revenue and diversions and building up our surplus.

The proposed budget includes another deposit into the Surplus Revenue Fund, or rainy day fund, which represents the first time in two decades that deposits have been made in consecutive years. The budget’s total projected surplus, including the rainy day fund, is $1.6 billion, or 4% of total appropriations.  

Pension System
In FY2021, Governor Murphy proposes making a $4.6 billion pension payment, a nearly 13% increase over FY2020. This contribution is supplemented by an additional $279 million payment in FY2020.

Savings Opportunities
The Governor will establish a Grants Management Office to identify federal funding opportunities for the State and local governments.  

Reducing One-Shot Revenues
Governor Murphy’s budget reduces non-recurring resources to 0.8% of the budget. The Governor proposes further reductions to the Clean Energy Fund diversion and restoring some 911 System and Emergency Response Fee revenues to support telecommunications upgrades.

Improving Affordability and Stabilizing Property Taxes

The Governor’s budget supports over $1.26 billion in direct property tax relief, which includes $276 million for the Homestead Benefit, as well as the increased property tax deduction cap and expanded Senior Freeze eligibility that the Governor and Legislature enacted in their previous budgets.

Supporting Local Governments and Shared Services
The FY2021 budget continues Governor Murphy’s commitment to achieving property tax savings through innovative shared services efforts. 

The proposed budget includes nearly $20 million to maintain the Local Efficiency Achievement Program, fund county-level dispatch centers, and restore payments for Open Space preservation, all of which will ultimately decrease costs for municipal governments. 

The budget also continues last year’s efforts to lower public health care expenses—which has led to rate decreases of at least 4% for participating municipalities and school districts—and invests at least $60 million from the Affordable Housing Trust Fund to support municipalities’ financial obligations to develop affordable housing.

Applying the Highest Marginal Tax Rate to All Millionaires
The Governor proposes applying the millionaire’s tax enacted in FY2019 to all income above $1 million, not just income over $5 million. This expansion, which will impact more non-New Jersey residents than in-state residents, is necessary to enable greater investment in programs, including property tax relief, for the middle class.

Growing Our Economy
Fast-Tracking NJ TRANSIT Improvements
The budget includes a General Fund subsidy of nearly $600 million, a $132 million increase over FY2020, to support the agency’s daily operations while allowing for bus and rail enhancements, new hiring, and a Battery Electric Bus program that advances the State’s clean energy goals.

Sparking Clean Energy Opportunities
The Clean Energy Fund will have $263 million for Clean Energy programs.

In addition to supporting energy efficiency programs and $30 million worth of electric vehicle rebates, the Clean Energy Fund will also support the launch of a Green Bank and clean-tech incubators.

Facilitating Sustainable Development
The budget proposes an $80 million appropriation to the Drinking Water Program as a first step of the Administration’s plan to ensure safe and modern water infrastructure.

Investing In Our Future

The budget invests in health care initiatives, support for working families, strategies to combat the opioid epidemic, and criminal justice reform.

Fighting the Opioid Epidemic
A $100 million commitment is continued, now through over 30 programs across eight state agencies, to fighting the opioid crisis through carefully designed programs and thoughtful, data-driven analysis to put resources where they are most needed.

Addressing Mental Health Needs
The budget invests at least $45 million in the Children’s System of Care to rebalance out of home and in-community service rates..

Reducing Environmental Harms
The budget invests in data infrastructure and outreach to prevent childhood lead poisoning. It also provides funds for preschool facility lead remediation. 

The Clean Energy Fund will support a Whole House pilot, which provides holistic energy-efficiency and health-related interventions for low-income residents. 

The budget also provides grant funding and staff to reduce the prevalence of harmful algal blooms to protect public health and local economies.

Expanding Poverty Relief
The Earned Income Tax Credit (EITC) is increased to 40% and proposes expanding EITC age eligibility from 25 to 21. 

The budget also enables counties to operationalize Code Blue programs so they can help homeless residents obtain shelter.

Leading on Criminal Justice Reform
The budget includes almost $30 million in implementation funds for Earn Your Way Out and Hepatitis C treatment, as well as new funds for transitional housing and job training.

The Governor and the Legislature have to enact a budget by June 30, 2020, per constitutional deadline.