McCarter & English: New Jersey Governor Phil Murphy’s FY2025 Budget Address: Key Highlights

New Jersey Governor Phil Murphy’s FY2025 Budget Address: Key Highlights

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Governor Murphy presented his FY2025 budget. Grounded in principles of fiscal responsibility, equitable education, economic opportunity, and affordability for all New Jerseyans, the proposed budget amounts to $55.9 billion. While the proposed budget prioritizes record amounts of spending in certain areas – supporting public schools, making a full payment into the pension system, and fixing NJ Transit – there is an indication that overall spending will be tightened. Further information will be released in the coming weeks with the publication of the Governor’s detailed budget proposal.

Here are some of the highlights from Governor Murphy’s FY2025 budget address:

Tax Relief and Programs: Governor Murphy reaffirmed his dedication to historic tax relief measures, highlighting the ANCHOR Program as a landmark initiative in the state’s tax relief efforts. This program stands as the largest property tax relief endeavor in New Jersey’s history. Furthermore, the budget expands the Senior Freeze Program and extends direct relief to diverse segments of the population through initiatives such as the Child Tax Credit and the Earned Income Tax Credit. Additionally, there will be a $200 million augmentation to the StayNJ program under the leadership of Speaker Craig Coughlin.

Health and Retirement Initiatives: Significant allocations have been designated for health and retirement programs in Governor Murphy’s FY 2025 budget. Notably, the proposal includes substantial investments for expanded child care capacity, food assistance programs, and youth protection services. Furthermore, the budget includes additional funding for the RetireReady NJ savings program, which was created by the New Jersey Secure Choice Savings Program Act to provide a new retirement option for private sector workers.

Education and Housing: The largest single increase in the Governor’s budget surpasses $900 million to support public schools across the state. The budget proposal also seeks to increase housing supply by incentivizing municipalities to create new accessory dwelling units to create more affordable options and to incentivize homeownership through down payment assistance programs.

Corporate Transit Fee: To tackle fiscal hurdles faced by NJ Transit, Governor Murphy proposes a Corporate Transit Fee targeting companies with net profits exceeding $10 million annually. This fee follows the sunset of the 2.5 percent surcharge in the state’s Corporation Business Tax (CBT), which expired at the start of this calendar year. Estimates provided by the Murphy Administration suggest that approximately 600 to 700 companies would be subject to this new fee, potentially yielding up to $800 million in annual revenue.

Economic and Job Growth: With continued financial support for small businesses, a targeted focus on the state’s film industry, and expanded tourism opportunities, the Governor remains committed to fostering economic development and investing in New Jersey’s talented workforce. Additionally, a significant investment of $5 million is earmarked for the creation of a pioneering nursing workforce initiative. The state’s emphasis on burgeoning sectors such as fintech, filmmaking, life sciences, and generative artificial intelligence (AI) is poised to create additional job opportunities.

Innovation, Clean Energy, and Technology: The Governor underscored a steadfast commitment to the state’s innovation economy, exemplified by initiatives such as offshore wind projects and the ambitious goal of 100 percent clean energy by 2035. To support these efforts, the proposed budget appropriates a $40 million investment in modernizing the state’s energy grid. Notably, New Jersey’s AI Moonshot initiative is poised for substantial progress with significant investments directed towards advancing generative AI technologies. Additionally, the introduction of a $4.5 million AI innovation challenge is aimed at fostering innovation in the field, while supporting new education and career development programs.

Social and Environmental Investments: Governor Murphy’s budget places a high priority on addressing critical social and environmental issues, with targeted funding allocated towards various initiatives. This includes continuing free school meals, safeguarding religious freedoms, enhancing security measures for houses of worship, and combating the opioid crisis through comprehensive intervention strategies. The budget also includes a funding increase for the ARRIVE Together program, nearly doubling its resources, to facilitate partnerships between police officers and mental health professionals.

In summary, Governor Phil Murphy’s FY 2025 budget presents a multifaceted strategy to tackle economic challenges, deliver tax relief, fortify social programs, and drive New Jersey towards innovation and sustainability. The Governor and the Legislature must now finalize a spending plan by June 30 – a protracted period marked by public hearings and leadership negotiations. McCarter’s Government Affairs team has an intimate knowledge of New Jersey government and deep relationships with political and industry leaders in the state. Please contact a member of our team with any questions or to learn more about the Governor’s proposed budget priorities.

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