Governor Delivers FY 2023 Budget Address
Earlier today Governor Murphy delivered his Fiscal Year 2023 Budget Address. The theme of the Governor’s Budget is The Opportunity State: Stronger, Fairer, More Affordable. The $48.93 billion budget is a 5.3% increase over FY 2022 state budget but does not propose any new taxes or fees.
The budget focuses on affordability, protecting health and safety, creating economic opportunity, and planning for the future. Below is a summary of the Governor’s FY 2023 Budget recommendation.
Facing New Jersey’s Challenges
Governor Murphy has re-stated his commitment to make New Jersey more affordable, protect the health of our residents, bolster economic development, and plan on our state future no matter what challenges lay ahead. The FY2023 budget reflects the changes that the Governor believes are necessary to help rebuild New Jersey in a post-pandemic world and the long-standing problems for decades of neglect of the state’s capacity while keeping Governor Murphy’s promise to not raise taxes.
New Jersey and Affordability
- Distributing Property Tax Relief for New Jersey Residents: Governor Murphy announced that his administration proposes to extend property tax relief to 1.8 million New Jerseyans by replacing the state’s Homestead Benefit program with the Affordable New Jersey Communities for Homeowners and Renters Property Tax Relief Program (ANCHOR). As proposed, the ANCHOR Program will distribute $900 million in property tax relief and increase both the average rebate and total program amount over three years. Homeowners making up to $250,000 annually could be eligible to receive an average $700 rebate in the Fiscal Year 2023 to offset property tax costs and renters making up to $100,000 annually could receive up to $250. Two years later eligible households would receive $1,150 on average and the overall cost of the program would increase to $1.5 billion.
- Making the Full Pension Payment: The proposed FY2023 budget includes the second consecutive year payment of $6.82 billion for the State’s pension system. This will be the second time that the State has made a full contribution since FY 1996.
- Providing Additional Funding for K-12 Education: The FY 2023 proposed budget includes a funding formula with an additional $650 million in K-12 aid while forwarding the Murphy Administration’s goal of increasing funding for Pre-K with an additional $68 million. With this additional funding, New Jersey will increase the amount of 9,000 new seats for New Jersey’s future generation.
- Affordable Housing and Security: The Murphy Administration has proposed using over $300 million in American Rescue Plan funds (ARPA) which will directly help complete 100 percent of affordable housing projects that were identified in the Mt. Laurel settlements. This allocation of funds will create an estimated 3,300 units. The FY2023 budget also proposes a $5 million increase to the Down Payment Assistance Program (DPAP) that directly helps first-time home buyers in the state. All these combined programs help the more than $1 billion in relief that the Murphy Administration will begin distributing this year. Local and Municipal Aid: Governor Murphy’s Proposed Budget announced there will be a flat amount of Municipal aid with the Consolidated Municipal Property Tax Relief Aid (CMPTRA) and Energy Tax Receipts receiving $1,437,800,000 with a very slight increase of .1 percent from the FY 2022 budget. Transitional Aid to Localities has decreased from FY 2022 from $122.7 million to $111.9 million with an 8.8 percent decrease. Both the Trenton Capital City Aid and Shared Services, School District Consolidation Study, and the Implementation Grant has reminded flat at $10 million from the previous year. The Open Space Payment In Lieu of Taxes (PILOT) program has decreased by 35 percent from the FY 2022 funding of $10 million to $6.5 million for this year's proposed budget. Lastly, the Highlands Protection Fund Aid has remained flat at $4.4 million.
New Jersey Economic Development
- Workforce Development: The FY2023 budget continues to invest in programs like Upskill, the New Jersey Apprenticeship Network, and the Pay it Forward Fund. This would continue to support initiatives produced by the Green Jobs Council to build a diverse workforce and expand New Jersey’s clean economy in the wake of climate change.
- Inclusive Economic Growth: Governor Murphy’s proposed budget maintains his previous investments in the Main Street Recovery Fund and Black and Latino Seed Fund to provide that our state residents benefit from economic recovery efforts. The FY2023 budget will include $65 million in new real estate initiatives, including a Diverse Developer Fund to help all communities in new construction.
- Economic Innovation Gains: The proposed budget includes a multi-year development to auction $300 million in transferrable tax credits to fund the Innovation Evergreen Fund in hopes that it will bolster New Jersey’s leadership in entrepreneurship and attach new investors and businesses to our state. The FY 2023 budget continues to invest in advanced manufacturing, life sciences, and the logistical industry while maintaining revenue generation for the STEM Loan Redemption Program.
- Transportation and Infrastructure: For this year's proposed budget, the Governor plans to use the Debt Prevention Fund for further game-changing capital improvement projects, including the restoration of Newark Penn Station while providing a flat amount on fare hikes to NJ TRANSIT while improving the commuter experience.
New Jersey Health and Safety
- Support for New Parents: The budget proposal includes approximately $20 million in State and federal funds to implement Statewide Universal Newborn Home Nurse Visitation program as well as $15 million to raise Medicaid rates for maternity care, midwifery education, and Central Intake Hubs.
- Affordable Health and Child Care: The Murphy Administration has stated its intent to prioritize affordable healthcare and implement new efforts to benchmark healthcare cost growth. The Governor will continue funding for the Cover All Kids program and increase funding for New Jersey’s Get Covered program. The Child Care Revitalization Fund will continue to be implemented to encourage small businesses to provide childcare benefits to employees.
- Mental Health and Community Safety: Governor Murphy will continue to work with the New Jersey Legislature to develop student mental health programs with the funding from the American Rescue Plan funding (ARPA). The Governor also proposed allocations for substance use disorder programs which will be supplemented $640 million over the next 18 years from opioid manufacturers. The Governor also made a renewed dedication to fund Community-Based Violence Intervention grants as part of his administration approach to combat gun violence.
Planning for the Future
- Fiscal Responsibility and Resident Services: The FY2023 proposed budget includes a $4.2 billion in surplus which is nearly double the level in the FY 2022 budget. The governor has proposed an allocation of a $1.3 billion FY 2022 deposit in the Debt Defeasance and Prevention Fund. The proposed budget also includes $430 million for school construction and renovation to reduce borrowing. The Governor has also announced allocating $30 million to meet the Electric Vehicle Act’s mandate of a 100 percent electric State fleet by 2035.
- Environmental Protection and Impact Zone Investments: The Murphy Administration has remained steadfast in ensuring that New Jersey remains one of the nations leaders in fighting climate change. Murphy’s Administration has promised to work with New Jersey’s Legislature to develop plans to use federal funding to eliminate lead hazards in thousands of units and make investments in clean water and flood resistance. The FY 2023 proposed budget has also allocated a first-time education grant program that is dedicated to new education standards on climate change. Governor Murphy has also proposed that as the sales of legal use of recreational cannabis begins the sales tax revenue will go to Impact Zones or communities that had been disproportionally affected by drug policies. These revenues also provide new opportunities for entrepreneurs and workers to invest in New Jersey’s newest industry.
Contact: Andrew LaFevre, Legislative Analyst, 609-695-3481 ext. 116 or email@example.com