On May 14, the New Jersey State Treasurer announced an increase in state revenues, leading to revised budget projections and a rise in projected cash reserves for the upcoming fiscal year. Despite these improvements, New Jersey continues to face a structural deficit nearing $1 billion. This persists even after proposed increases in revenue and spending cuts by the governor.
In response to this development, New Jersey Policy Perspective (NJPP) issued a statement. Peter Chen, Senior Policy Analyst at NJPP, commented on the situation: “New Jersey’s higher-than-expected income tax receipts reinforce what NJPP research has long shown: A robust, progressive income tax code can generate the sustainable revenue needed to fund public goods and services that residents depend on — from strong public schools to reliable transit."
Chen emphasized that although the revised forecast is positive, it does not fully address the gap between state collections and proposed expenditures. He noted that "a structural budget shortfall of approximately $1 billion remains," highlighting the necessity for more progressive revenue solutions. Without such measures, Chen warned that New Jersey might deplete its surplus and weaken its capacity to respond to potential federal funding cuts affecting Medicaid, food assistance, and infrastructure.
He further explained that as testified by both the Treasurer and the Office of Legislative Services, New Jersey risks losing billions in federal aid while being vulnerable to economic downturns. According to Chen: “The path forward is clear: Lawmakers must build on the governor’s budget by strengthening progressive revenue measures that ask the wealthiest to pay their fair share."
Chen concluded by stressing that robust and equitable revenue is crucial for safeguarding essential services and ensuring a resilient future for all residents of New Jersey.
