In February Gov. Phil Murphy proposed a record $58.1 billion state budget for 2026; the Legislature took it and increased it by $700 million this week and then passed it. It was signed by Murphy late Monday night, the last possible day for avoiding a state shutdown.
In typical New Jersey fashion this meant few members of the public had any chance to see what the legislators were doing until after they did it.
A look at the new budget as it affects Cape May County suggests some areas of concern.
The Basics
The final $58.8 billion budget kept Murphy’s priorities for a full pension payment, funding of the school state aid formula and the popular property tax relief programs Anchor and Senior Freeze. Stay NJ received funding, but the next governor will have to figure out how to keep the $1.2 billion program alive.
The budget includes new revenue measures through taxes on sales of high-end homes, cigarettes and online gambling. It has the state spending $1.5 billion more of taxpayer money than it expects to collect in the coming year, an increase in the state’s structural deficit imposed by the lawmakers, who dipped into state reserves to pay for it.
Of the $700 million the Legislature added to Murphy’s already record proposed budget, some of it went for pet projects in Democrat-controlled districts. The list of these added local spending projects was not released; last year it was not available until August.
While lawmakers added pet projects, advocacy groups complained that the state was taking no action to prepare for likely cuts in Medicaid and food assistance programs.
New Jersey Policy Perspectives said, “While other states build up their savings to help smooth the potentially devastating cuts, the state’s political leadership chose instead to conduct business as usual in Trenton.”
Good government groups also decried the eleventh-hour nature of the budget passage, pointing to the fact that the lack of earlier attention to the budget did not allow the public a voice.
Cape May County
One of the measures likely to have a significant impact in Cape May County is the change in realty transfer tax fees for sales of high-end homes. While the tax stays at 1% for homes sold for less than $2 million, it doubled to 2% for those sold at $2 million to $2.5 million, rises to 2.5% for those sold for between $2.5 million and $3 million, and triples to 3% for homes that sell for $3 million.
For those homes that sell for $3.5 million or more, the fee will be 3.5%, and a home selling for $4 million will carry a transfer fee of $140,000 as opposed to the current $40,000. The fee is to be paid by the seller, a change from the initial proposal from Murphy that would have had the additional fees paid by the buyer.
Data from Zillow puts the average home value in the county at $755,651, with the more expensive island communities like Stone Harbor and Avalon seeing median prices in the range of $2.5 million. The latest data on the total market value of real estate in Cape May County puts the figure at $97 billion, which means a large number of property transfers in ranges that will be affected by the transfer fee changes.
The budget does maintain a $6.7 billion surplus that Murphy wishes to leave for the next governor. However, critics of the budget point to what is not there, including help with local government worker health-care insurance increases that continue to jump by double digits annually. Although five municipalities in the county have opted out of the state health-care program, the others remain exposed to the rising prices that are mostly paid by property taxpayers.
The budget has also been criticized for failing to prepare for the federal cuts that seem likely once Congress finishes with the federal budget. Estimates are that federal cuts to Medicaid could impact New Jersey to the tune of $3.6 billion. Cape May County has a significant portion of its population that relies on Medicaid for health coverage. Estimates put the number at 12% of the county population.
Attorney General Matthew Platkin spoke out against a move by lawmakers that redirected $45 million of opioid recovery funds away from programs that help struggling addicts and to some of the state’s largest hospitals, including Cooper University Health System. Cape May County has a disproportionate share of individuals dealing with opioid addiction.
Democratic legislative leaders praised the budget, with Majority Leader Louis Greenwald (D-Burlington) calling it a “fiscally responsible budget” that is a “win” for New Jersey. Assembly Speaker Craig Coughlin (D-Middlesex) said the budget “held the line on taxes for middle-class families” while “putting more money back into people’s pockets.”
Coughlin promised hearings in July on public worker health benefits, saying that the Legislature will “monitor any potential premium increases and their impact on public plans.”
Republican Senate leader Anthony Bucco (R-Morris) called the budget process “shameful” and devoid of accountability, planning and transparency.
Assemblywoman Nancy Munoz (R-Union), the Assembly’s Republican budget officer, said, “The truth about the budget is that it continues us on an unsustainable path. The budget does not make New Jersey more affordable. We are once again spending too much.”
Contact the reporter, Vince Conti, at vconti@cmcherald.com.
