New Jersey Gov. Phil Murphy Tuesday unveiled a $55.9 billion budget proposal for fiscal 2025 that would impose a new Corporate Transit Fee on the state’s largest and wealthiest corporations to create a “new, dedicated, and permanent funding stream” for NJ Transit.
The fee, which would affect about 600 companies with net taxable income greater than $10 million, is expected to generate $1 billion in fiscal 2025, and $800 million to $900 million in annual revenue after that, according to the plan.
Combined with fare increases proposed in January and cost-saving operational reforms, “the agency will have the resources to overcome the ‘fiscal cliff’ it faces in fiscal 2026 due to the decline in farebox revenue since the pandemic and the expiration of COVID-related federal funding,” the governor’s budget proposal said. The state’s contribution to the transit agency’s operating budget would be the second largest in history, it said.
Edwin J. Torres/NJ Governor’s Office
Gov. Murphy’s seventh budget message, which includes a $6.1 billion surplus and spending reductions of $1 billion, also calls for $7.2 billion in contributions to the state’s pension system, the fourth consecutive full pension payment. That payment includes contributions from the state lottery.
“When the proposed fiscal 2025 pension contribution is included, the combined pension contributions during the Murphy administration will total nearly $40 billion, more than three times the total amount contributed by the previous six governors combined,” the governor’s budget message claims. The funded ratio for all state pension systems will have increased from 49.8% in fiscal 2022 to a projected 52.4% in 2025.
The budget proposal says the Murphy administration “has prioritized strengthening New Jersey’s finances,” noting that the four major bond rating agencies “have collectively upgraded the state’s credit rating seven times in the last 24 months,” saving tens of millions of dollars in future interest payments.
“To put that into context, the last time New Jersey’s credit rating was upgraded, the iPhone did not yet exist,” Murphy said in prepared remarks distributed before his budget speech Tuesday. “And the last time, before that, was during the administration of President Jimmy Carter.”
Over the last three years, the state has defeased a total of $4 billion in bond principal, “saving taxpayers $1.358 billion in interest,” the governor said. In January, the state paid off $500 million in debt, saving $160 million in interest payments.
The new budget would use the state’s Debt Defeasance and Prevention Fund to avoid new borrowing while providing $120 million to finish the State Police Training Center, $70 million to support state parks, and $21 million to convert veterans’ homes to single occupancy.
New Jersey’s general obligation debt is rated A1 by Moody’s Investors Service, A by S&P Global Ratings, and A-plus by Fitch Ratings and Kroll Bond Rating Agency.
The governor’s budget proposal also calls for $3.5 billion in direct property tax relief in fiscal 2025, including more than $2 billion through the state’s ANCHOR Property Tax Relief Program, which the administration says will help reduce property taxes by more than $6 billion over three years for nearly two million state residents. The program has provided more than $4 billion in direct tax relief since the program began two years ago.
The Murphy budget proposal also calls for new funding for the RetireReady NJ program, formerly known as the Secure Choice Savings Program, which is expected to launch this year. The program encourages private businesses in the state to help their employees save for retirement in a Roth or traditional Individual Retirement Account through payroll deductions.