Sherrill $60.7B budget: key quotes and legislative reactions

The basics:

• Gov. Sherrill outlined $60.7B FY 2027 budget, emphasizing affordability, transparency, cutting structural deficit
• Key points include investments in schools, pension funding, property tax relief, small business support
• Democratic lawmakers prais pension payments, school funding, collaboration with governor
• Republicans criticize new spending, tax changes, potential impacts on seniors — call for deeper structural reforms

Gov. Mikie Sherrill outlined a $60.7 billion Fiscal Year 2027 budget Tuesday in Trenton. The inaugural address was titled “Rising to the Mission: A More Affordable & Accountable New Jersey.”

The spending plan includes a record $12.4 billion in school funding, $7.3 billion full pension payment, $4.2 billion in property tax relief, $2 billion in spending cuts, more than $700 million in new revenue from closing corporate tax loopholes (which has drawn concerns from the business community) and more.

“This is an affordability budget, rooted in lowering costs for hardworking families and making state government more accountable to the people we serve,” said Sherrill. “New Jerseyans gave me a mandate to challenge the status quo and that’s exactly what this budget does – there’s no more kicking the can down the road.

“That’s why I’m cutting the structural deficit nearly in half, and investing in solutions to lower electric bills, protect kids online and expand school-based mental health services, and make it easier to start and grow a small business in New Jersey.

“I’m also restructuring how state government delivers for people – bringing more transparency with a Report Card on how hard-earned tax dollars are spent and speeding up the permitting process for businesses. With cuts from Washington, New Jersey faces a lot of challenges – but we’ve never backed down from a fight, and we are rising to the mission with a ruthless focus on expanding opportunity for the middle class.”

Read more on the budget particulars here and here.

No more ‘business as usual’

“Government hasn’t been working the way it can – the way it should,” said Sherrill. “And here in New Jersey, a broken budget is at the heart of so much of that.”

The governor said it is time for Trenton to lay the foundation for a solid future, as opposed to taking “the easy way out” with a quick fix.

Referencing the projected $3 billion structural deficit leading into the process, Sherrill warned against inaction. “If we do nothing, our entire $7.2-billion surplus will be gone in less than two years – and we’ll be another $750 million in the hole.”

She made several remarks toward changing “business as usual” in Trenton, which she says has persisted for decades. “There have been too many one-offs. Too many temporary fixes. Too little willingness to challenge what’s always been done.”

Sherrill said that during the last days of the prior administration, New Jersey residents incurred nearly $3 billion in extra spending: “$2.5 billion in corporate tax breaks and $240 million in giveaways. That can’t happen. We can’t afford that process anymore.”

The plan now moves into the hands of the Legislature. This week, leaders and members of both parties in each chamber reacted to the proposal.

Pension planning

Senate President Nick Scutari, D-22nd District; Senate Majority Leader Teresa Ruiz, D-29th District; and Senate Budget Committee Chairman Paul Sarlo, D-36th District, issued a joint statement on the budget.

“The Democratic-led Legislature has successfully navigated significant fiscal challenges, collaborating with Governors from both parties to make tough decisions that prioritize the welfare of all residents. Notably, the Legislature has fully funded the pension system for five consecutive years – an accomplishment not seen in the last two decades,” the senators said.

In her remarks, Sherrill credited the Murphy administration and lawmakers for resuming payments. However, she also called attention to how past behavior affects the present. Sherrill noted New York spends a comparative $2 billion to fund its state pension system. Meanwhile, “New Jersey owes nearly $6 billion a year in back-payments – because for 30 years, other administrations, Democratic and Republican alike, simply refused to pay our bills.”

The governor highlighted lost opportunities, as a result. “Imagine what we could be doing with that money, if … elected officials hadn’t mortgaged our kids’ futures. … That’s the price we all pay.”

Working together

Vowing collaboration, Democratic leaders also acknowledged Sherrill’s insights regarding challenges posed by the Trump administration. They added many in the Legislature recognize the behavior as a barrier to effective governance.

“Together with the new Governor, we will tackle the complexities of an erratic presidency, a new global conflict, escalating gas prices, and the rising costs of health care. As we move forward, our experienced Legislature is well-equipped to address these challenges.”

Over the coming months, Democrats said they aim to develop a budget that reflects resident priorities and addresses state needs responsibly. “Our commitment to the people remains unwavering, and we look forward to presenting a comprehensive budget in June that showcases our shared vision for a prosperous future.”

Assembly Speaker Craig Coughlin, D-19th District, said, “As we begin our review of the proposed budget for Fiscal Year 2027, I thank the Governor for partnering with the Legislature in fulfilling our promise of making New Jersey more affordable. Once again dedicating nearly half of the Appropriations Act to direct and indirect property tax relief sends a clear and decisive message to our taxpayers that Trenton is serious about supporting its residents, schools and local communities.

“I appreciate and accept the Governor’s call to make tough budget decisions in the face of federal cuts and tariffs, a slowing economy, and lower corporate tax revenue. With our budget process just starting, the Assembly is prepared to do the hard work on behalf of the people of New Jersey like we did in achieving a full pension payment and full school formula funding.”

Republican critiques

Meanwhile, Senate Republicans said they were disappointed by Sherrill’s shift in tone, but expressed hope she’ll “return to the fiscally responsible message that she delivered just two weeks ago.”

“We recognize that the budget that is proposed is never the budget that is adopted — that’s part of the negotiation process between the Governor and the majority party in the Legislature. Hopefully they’ll include us,” said Senate Republican Anthony Bucco, R-25th District. “But I can tell you there’s a few things in there that we’re already concerned about. We need real structural reform.

“Right now, taxpayers are going to lose their property tax deduction, so I’m concerned where this budget has come out. We have a long way to go, but the devil will be in the details.”

According to Sherrill, “[W]ith this budget, we’ve almost halved the structural deficit, avoided raising taxes, and fully funded pensions. We’ve given notice that special interest giveaways are over, and moved resources to help working people instead. And this is the budget we can afford. If there are things you think we need to add – come to me with places we can cut. It’s simple math: any additions require subtractions.”

Subtractions proposed by Sherrill include pairing back some corporate tax breaks and capping the deduction that highest-earning companies can take for net operating losses.

“After COVID, more started claiming this deduction to write off losses seen in those years. It’s time to move on,” she said. “We won’t keep shortchanging the future. Limiting this loophole saves taxpayers almost $500 million.”

Signs of encouragement?

Senate Budget Officer Declan O’Scanlon, R-13th District, pointed out the FY 2027 budget proposal marks the largest in state history. “And there’s almost $2 billion more of taxes.”

Sherrill’s proposal includes changes to the Alternative Business Calculation. “The whole point was to level the playing field for entrepreneurs. But bigger companies started using it, too,” the governor said.

To combat that, the budget proposal limits the deduction by capping eligibility at business income of $1 million per year. “The car repair shop and the diner down the block are the ones who should benefit,” she said. “This fix will save another $120 million a year – without taxing families a dollar more.”

O’Scanlon pushed back against the notion that certain changes do not affect residents.

“Whatever you want to say, ‘Oh it’s all on businesses,’ I call BS on that — businesses don’t pay taxes, they pass all these taxes down onto everybody that buys their products and their services. This is not an affordability budget, yet,” he said. “I am encouraged by some of the things that we’re hearing.”

“The emphasis on expedited permitting, especially for energy infrastructure. Reining in pork. I would stand up and applaud that, cause billions of dollars of random money to pet projects in coveted legislators’ districts is no way to run a railroad.”

Tax increases

Assembly Republicans expressed concerns about spending levels, as well as proposals that phase out deductions and increase employer health care contributions, which they described as tax increases.

“Spending continues to move in the wrong direction – up and up, just like the last eight years. This is more of the same, and nothing, apparently, has changed,” said Assembly Republican Conference Leader Christopher DePhillips, R-40th District. “Overall, this budget is not a win for the people of this state and does not improve affordability in New Jersey.”

In her remarks, Sherrill referred to the plan as the most fiscally responsible budget the state has seen in years. “It’s just the start,” she said.

“New governor, same old song,” said Assembly Republican Budget Officer Brian Rumpf, R-9th District. “We have numerous revenue enhancements, or whatever the new terminology may be. For Republicans, we call it taxes, because we call it like it is. When we’re talking about the new spending in this budget, what we’re talking about is new taxes. And there’s close to $1 billion worth in this budget.”

Rumpf also pointed to the slimmed-down Stay NJ and the impact it will have on seniors who will see a reduced benefit or a loss of the benefit because of the lower income threshold. “The first thing that Gov. Sherrill does when she comes to office is cut the most significant program for tax savings for our seniors in this state,” Rumpf said.

“In life, you rarely get to choose your mission; you rise to it,” Sherrill said Tuesday presenting the plan. “This is our mission; this is what we’re building; this is the time to do it.”

Stay tuned for further coverage and reaction on the budget proposal – as things get off and running in Trenton for what should be a notable, lively, and tough budget season.