New Jersey State Budget FY2027 Analysis

New Jersey spent $60.7 billion across all funds in FY2027, or $6,357 per resident. All-funds spending counts the general fund, federal grants, and dedicated state funds together — the fairest basis for comparing states, since they differ widely in how much they route outside the general fund.

Reserves in the rainy day fund stood at $6.1 billion. Because nearly every state is constitutionally required to balance its operating budget, reserves rather than borrowing are how states absorb revenue shortfalls in a downturn.

New Jersey's FY2027 budget — the first signed by Governor Mikie Sherrill, on June 30, 2026 — totals a record $60.7 billion, roughly 3.7% above FY2026. Treasury and Office of Legislative Services forecasters projected about $59.2 billion in revenue, so the state still spends beyond recurring income, but the structural deficit was cut to $1.35 billion, less than half the $3 billion-plus gap projected when Sherrill took office, cushioned by a $6.084 billion projected surplus. The defining commitments are continuity items New Jersey watchers track closely: a sixth consecutive full pension payment of $7.3 billion, record K-12 aid of $12.4 billion (up more than $370 million) alongside $1.4 billion in preschool aid, and more than $4.1 billion in direct property-tax relief spanning ANCHOR ($2.186 billion), the new StayNJ senior benefit ($756 million) and Senior Freeze ($345 million). NJ Transit's dedicated Corporate Transit Fee delivers $765.6 million, raising operating support 28% year over year. The budget avoids income-tax increases and boosts the state child tax credit by 25% for tax years 2026-2028, though it adds a new employer health-insurance assessment tied to Medicaid enrollment reporting, which business groups criticized alongside the record spending level. April 2026 tax collections outperforming forecasts allowed lawmakers to enlarge the surplus in the final deal, but the remaining structural gap and pension-and-school-aid growth leave FY2028 negotiations starting from a tight baseline.