Tax-Rebate Close As $50.6B NJ Budget Moves Forward: What's In It?

NEW JERSEY — The largest state budget in New Jersey history moved closer to passage Wednesday after the State Senate backed the $50.6 billion spending plan. The General Assembly is also set to vote on the 283-page budget on Wednesday, which would make it only require Gov. Phil Murphy's signature to take effect for the 2023 fiscal year.

The budget largely passed along partisan lines in the State Senate with a 25-15 tally. Democrats and State Senator Vince Polistina (R-2) backed the spending plan.

Legislative Republicans have criticized the budgetary process, claiming a lack of transparency. Budgetary committees considered dozens of bills Monday that involved late additions to the spending plan.

GOP leadership has also said the budget doesn't go far enough to help New Jerseyans save in the midst of inflation exacerbating the state's high cost of living.

"This budget misses a historic opportunity to give back billions to taxpayers who are struggling with high taxes and inflation," said State Senate Republican Leader Steven Oroho.

Senate Budget Committee Chair Paul Sarlo, however, said the budget meets the moment.

"This is a responsive and responsible budget that addresses the economic challenges of our time," Sarlo (D-36) said. "It provides the largest tax cut and the largest surplus in state history. It also makes use of state and federal resources to reduce debt and make strategic investments in our future."

Here's what's inside the budget:

'Affordability': The Magic Buzzword

Murphy has used no word more than "affordability" to describe the budget since he introduced it in March. Critics have called the relief measures gimmicks while saying they don't do enough for taxpayers in the state with one of the nation's highest costs of living.

The budget includes an overhaul to the state's property-tax rebates, replacing the Homstead Rebate with the ANCHOR (Affordable New Jersey Communities for Homeowners and Renters) Tax Relief Program.

Valued at $2 billion in relief, the ANCHOR program sets aside rebates of $1,500 for homeowners with a household income less than $150,000, $1,000 for homeowners with households making between $150,000 and $250,000 per year, and $450 for renters with incomes up to $150,000.

The average New Jersey property-tax bill in New Jersey was $9,284 in 2021 — among the highest in the nation. Rough figures from the ANCHOR program average a $971 annual benefit for 2 million residents.

Murphy, Senate President Nicholas Scutari and Assembly Speaker Craig Coughlin also announced a sales-tax holiday on back-to-school supplies from Aug. 27 to Sept. 5. Read more: NJ Sales Tax Holiday Coming For Limited Run

The budget also features one-year fee holidays for driver’s license renewals, marriage licenses and state park entry.

Schools

Under the budget, the state will provide $12.8 billion in aid to schools for the 2022-23 school year — an increase of about $1.7 billion from last year.

The budget falls about $600 million short of fully funding schools, according to NJ Advance Media. But state leaders told the publication the newly expanded tax-relief program prevented them from doing so this year, and fully funding schools will become a goal for next year's budget.

NJ Transit

The transportation agency will receive a $100 million subsidy and $800 million for projects. NJ Transit is projected to spend $2.76 billion in the fiscal year. The agency's operating budget will incorporate $721 million from an agreement with the Turnpike Authority, according to NJ Advance Media.

The Murphy administration also wants to pay for transportation projects with a portion of the $4.2 billion available in the state's debt reduction and avoidance fund created last year, the publication says. Projects would include modernizing Newark Penn Station and the Walter Rand Transportation Center Improvement Project in Camden.

What Else Is In There?

The budget includes a payment of nearly $7 billion for New Jersey's pension fund, which supports the retirement of about 800,000 former state- and local-government employees. This marks the first time in more than 25 years that the state made a full pension contribution.

The budget also uses $305 million in American Rescue Plan funding to create the Affordable Housing Production Fund for completing affordable-housing projects. Additionally, the finalized budget features $25 million for the Down Payment Assistance program, which the state says has helped 2,134 people purchase a home.