A Look at FY26 Budget Priorities

Report to Members

By Michele N. Siekerka, NJBIA President and CEO On Feb 27, 2025

When the March 2025 issue of New Jersey Business Magazine is published, Gov. Phil Murphy will have just given his FY26 budget address – the last of his two terms as New Jersey’s chief executive.

However, we have known the business and economic priorities of this budget since he signed the current budget last June.

You’ll recall the governor hit our largest employers with a new $1 billion corporate transit tax, backtracking on a commitment to sunset a temporary 2.5% corporate business tax surtax that was set to expire Dec. 31, 2023. 

This was a serious blow to our job creators, returning them to the highest CBT rate in the nation. It was deemed by leadership as essential to fund NJ TRANSIT. 

Further, that tax was retroactive to Jan. 1, 2024 – even though NJ TRANSIT was not facing a fiscal cliff. The $1 billion was placed into the state surplus and not directly allocated to NJ TRANSIT on July 1, 2024. 

Regardless of our opposition to this tax, we accept it is here and call upon the governor and legislative leadership to ensure this tax is used for its intended purpose – NJ TRANSIT – despite there being no constitutional amendment to dedicate this tax revenue to NJ TRANSIT.

If we sound skeptical, we are. Historically, other ‘dedicated funds’ such as debt defeasance funds, state-based 911 fees, or clean energy funds have been diverted to fill budget gaps. Further, there were stirrings last year that this money could be used to fund the Stay NJ senior tax relief program. 

Other FY26 budget expectations include spending cuts, since we know the current spending level is not sustainable. Regardless, it’s critical that we at least maintain pro-growth spending in areas such as manufacturing and higher education.

Last year, the governor and Legislature had the good sense to restore $20 million in operating aid for New Jersey’s community colleges that had initially been cut. 

Our community colleges educate nearly 240,000 students annually. They provide residents of all ages and backgrounds opportunities to seek a better life, and the education they provide powers key industries. It’s imperative to keep this commitment.

Manufacturing is also where investments yield economic growth. Unfortunately, last year NJEDA’s Manufacturing Voucher Program was cut from $20 million to $10 million, limiting the very success of this program to cover a portion of eligible equipment costs.

Manufacturing has multiplier effects on our economy and for jobs. We must be mindful of this investment, and it must be a part of our FY26 spending plan. 

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