Erin Lanahan New Jersey Governor Mikie Sherrill proposed a budget focused on affordability and accountability on Tuesday, March 10th, 2026. This budget, at $60.7 billion, is $980 million more than the state’s current budget and includes $2 billion in cuts. This budget proposal will undergo weeks of public hearings in the Legislature. It must be signed into law by June 30. Here’s a breakdown of what the proposed 2027 budget means for New Jersey residents.
The Budget Breakdown
The big picture is that the proposed $60.7 billion budget grows spending by 1.6% and includes a $5.4 billion surplus. That’s below the 7% annual average of the last eight state budgets, according to the Governor’s office. It avoids new taxes on residents while closing corporate tax loopholes to raise revenue.
“This is an affordability budget, rooted in lowering costs for hardworking families and making state government more accountable to the people we serve,” said Governor Mikie Sherrill in a press release. “New Jerseyans gave me a mandate to challenge the status quo and that’s exactly what this budget does – there’s no more kicking the can down the road. That’s why I’m cutting the structural deficit nearly in half, and investing in solutions to lower electric bills, protect kids online and expand school-based mental health services, and make it easier to start and grow a small business in New Jersey. I’m also restructuring how state government delivers for people – bringing more transparency with a Report Card on how hard-earned tax dollars are spent and speeding up the permitting process for businesses.”
A Closer Look
The Governor’s budget proposes that over two million residents will see $4.2 billion in property tax relief. That includes $2.3 billion for ANCHOR, or the Affordable New Jersey Communities for Homeowners and Renters program, $350 million for Senior Freeze, and nearly $700 million for Stay NJ, the senior property tax relief program.
The $250 bonus that was extended to senior homeowners and renters under ANCHOR is set to expire after the fiscal year 2026. The budget proposal would allow senior renters to continue receiving this $250 bonus, and senior homeowners would continue to receive the additional benefit through Stay NJ instead.
Governor Sherrill is pushing to make cuts to Stay NJ. She proposes modifying the eligibility for Stay NJ, capping the qualifying income threshold at $250,000. It’s currently $500,000. Plus, the additional maximum benefit amount for Stay NJ would be capped at $4,000. It’s currently $6,500.
When it comes to energy costs, the budget directs the Board of Public Utilities to identify funds for additional Residential Energy Assistance Payments (REAP), particularly for lower-income households. It builds on the Governor’s previous executive orders to freeze utility rate hikes and expand power generation. Plus, the Governor wants to use off-budget funding sources to protect New Jersey ratepayers from rate increases without compromising funding for critical energy assistance programs, effectuating the rate freeze. Off-budget funding sources typically come from dedicated revenue streams outside the General Fund, which is the primary operating account for the State. It comes from dedicated, non-state sources such as federal grants like Medicaid and transportation, state-level dedicated funds, specialized industry fees, and municipal revenue sources like fines, licenses, and service charges.
$12.4 billion would go to K-12 education. It’s a $370M increase from last year, and dedicates $1.4 billion for preschool. The proposed budget would double high-impact tutoring funding and provide 21,000 kids with free school meals through the Working-Class Families Anti-Hunger Act.
This fall will mark the beginning of New Jersey’s first cell-phone-free school year. Because of this, the budget proposal includes $125,000 for the new Office of Youth Online Mental Health Safety and Awareness in the Department of Health. The office will research and recommend ways to guide responsible use for children using social media platforms. It also includes $500,000 for a new Social Media Research Center at one of New Jersey’s higher education institutions.
The proposed budget includes $13.3 million in State funding for the New Jersey Innovation Authority to support initiatives like Permitting Dashboard and the New Jersey Report Card. It also supports tech upgrades across the State government, including $3 million for the Division of Consumer Affairs to upgrade its licensing system and complaint database. It also reduces business registration fees and improves procurement assistance for minority and women-owned businesses.
NJ Transit would receive over $1 billion in state operating support aimed at improving commutes statewide. It’s a $215 million increase from last year. The budget also includes $2.1 billion for the State Transportation Capital Program. It’s made up of $1.3 billion for critical investments in State, local highway, and bridge projects, and another $782 million for NJ TRANSIT capital projects.
The detailed budget proposal for the 2027 fiscal year can be found online.
What’s Next?
This is just the first step in creating a budget for the State of New Jersey. The budget is required to be balanced with revenue certified by the Governor. If it’s not signed by July 1st, a government shutdown occurs.
The budget approval process begins with the proposed budget from Governor Sherrill. She then submits it to the State Legislature. Then the Senate Budget and Appropriations Committee and the Assembly Budget Committee will review the proposal. During this time, they will hold hearings and make changes as they see fit. Both houses of the Legislature must vote to pass the final budget. Finally, the Governor will sign the budget into law. She will also have the power to use a line-item veto to remove specific spending items.
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