Assessing the Address: Governor Murphy’s New Jersey 2023 Budget Proposal
In his fiscal year 2023 budget address, New Jersey Governor Philip D. Murphy proposed a $48.9 billion state budget that aims to tackle key tax and cost of living issues in addition to expanding education, health care, social services and infrastructure initiatives. We break down the notable developments in this year’s budget and what they may signal for the state’s legislative agendas and business communities.
Tax Rebates and Housing
Enhancing affordability and cost of living in the state was a high priority item for Gov. Murphy. His spending plan includes tax relief, rebate, and affordable housing programs.
- The ANCHOR Property Tax Relief Program – a new $900 million property tax relief program that replaces the Homestead Benefit and is intended to assist up to 1.8 million NJ households and renters:
- Homeowners with incomes of $250,000 or less are eligible for an average of a $700 rebate in their first year
- Renters with incomes of $100,000 or less are eligible for up to a $250 rebate to assist with rent price increases
- Affordable Housing Production Fund – a $300 million spending plan to use America Rescue Plan (ARP) funds to invest in affordable housing development and construction, particularly in Mount Laurel
- Increase Down Payment Assistance program budget by $5 million to help low- and moderate-income home buyers
- Invests $65 million in new real estate initiatives and the Diverse Developer Fund, which ensures that new construction reflects more communities
The administration also intends to work with legislators to develop solutions for using federal funds to eliminate lead hazards in thousands of units and make investments in clean water and flood resistance.
Pension Contributions and Fee Waivers
Gov. Murphy also focused on continuing to fulfill, in its entirety, the state’s public employee pension obligations. He proposed a $6.82 billion contribution that is meant to help 800,000 active and retired state and local government workers. This robust payment departs from a decades-long trend of skipping or shorting payments to the state’s pension system.
As a cost of living benefit, the administration will spend $60 million to cut a range fees for a one-year “fee holiday” that makes state parks free to NJ residents and waives fees for marriage licenses, drivers license renewals and select health care professional licenses for up to 130,000 individuals.
Roughly 24 percent of the total fiscal year budget is directed to aid education. There were a range of budget increase proposals for the state’s education sector:
- Increase public school aid by $650 million (to a total of $9.9 billion) and expand public pre-K schools
- Increase higher education funding to $2.9 billion to assist colleges, universities and financial aid opportunities
- Raise income threshold to $80,000 for the state’s tuition-free community colleges
Health Care Funding
Tammy Murphy, New Jersey’s First Lady, has been a strong advocate for maternity care – an areas that has received boosted funding in the 2023 budget:
- Increase Medicaid spending by $15 million to enhance reimbursement rates for clinicians, midwives and doulas; provide $1 million in grants to midwifery training
- A new $17 million program to provide parents with free home visitations by nurses shortly after a child’s birth
The Governor also proposed to work on legislature for developing student mental health initiatives and proposed using $53 million in ARP funds to help taxpayers without Social Security numbers receive federal stimulus aid.
NJ Transit fares will remain the same, though the state’s public transportation system is projected to increase its budget by 7 percent to a total of $2.76 billion. Notably, the administration intends to use $700 million left in $3.7 billion debt defeasance fund created last year to find a range of projects that include bridge construction and improvements to transportation centers and stations.
Aiming to strengthen and advance innovation in the state’s workforce, Gov. Murphy will start a multi-year effort this year to auction $300 million in transferrable tax credits to fund the Innovation Evergreen Fund, which will boost New Jersey’s leadership in entrepreneurship and attracting venture capital.
The New Jersey Legislature will likely accept the Governor’s budget for FY 2023 and have few, if any, changes. The ANCHOR program will provide tax relief to approximately 1.8 million New Jerseyans who, on average, have about 7% of their income devoted to paying the property tax bill in New Jersey, though in some cases that percentage is as high as 10%.
Putting resources towards the Affordable Housing Production Fund could assist teachers, grocery store clerks, fireman and other public service workers who provide services to all of New Jerseyans.
The $6.82 billion pension payment will bolster state pension systems and likely assist in a potential upgrade of New Jersey’s bond rating and consequently make borrowing costs less for New Jersey.
The Innovation Evergreen Fund is the result of the NJ Legislature’s actions in the Economic Recovery Act of 2020 and will likely attract businesses to New Jersey.
Finally, the budget provides for a significant level of funding for New Jersey’s schools which are considered to be among the finest public schools in the nation.
The $15 million increase for Medicaid funding to support maternal health will be for the state’s minority and underserved communities, which suffer from some of the highest infant mortality rates in the country.
Given the robustness of the Governor’s budget and the Democratic controlled Legislature, we can expect to see the adoption of many, if not all, of these programs.
For more information on budget initiatives, view this concise outline of the New Jersey Fiscal Year 2023 Budget.