Following extensive deliberations and legislative actions, Governor Phil Murphy signed the Fiscal Year 2025 New Jersey Appropriations Act on Friday night, setting the state’s financial course for the upcoming fiscal year. The FY 2025 Appropriations Act aligns closely with Governor Murphy’s initial budget recommendations, reinforcing commitments to education and infrastructure improvements, alongside a five-year tax hike on corporations to support NJ Transit.
Key Budget Highlights:
Corporate Transit Fee to Support NJ Transit: The budget introduces a new Corporate Transit Fee to establish a sustainable funding source for NJ Transit, recognizing the critical role of reliable transportation in the region. The fee adds a 2.5% surtax, on top of the state’s existing 9% rate for businesses, for corporations with taxable net incomes over $10 million. Expected to generate approximately $1 billion in additional revenue, the surcharge aims to bolster transit services, enhance infrastructure reliability, and aid ongoing ridership recovery efforts post-pandemic. The surcharge sunsets after five years and is retroactive to profits from January 1, 2024.
Historic Investment in Education: Education receives unprecedented support with a record-breaking $900 million earmarked for K-12 school aid. This funding completes a seven-year phase-in of the school funding formula, totaling nearly $12 billion, which significantly offsets local property taxes while ensuring equitable access to quality education statewide. Additional provisions include $124 million to expand pre-K education and over $290 million for community colleges, reflecting a commitment to nurturing future generations and enhancing workforce readiness. The budget also builds on significant youth mental health investments with $40 million for the NJ Statewide Student Support Services network and various new Mental Health Initiatives.
Investing in Economic Growth: The FY 2025 budget prioritizes economic growth with targeted investments, including $40 million to modernize New Jersey’s electric grid and support the state’s climate goals. It also advances the Governor’s “AI Moonshot” with initiatives like a $4 million innovation challenge using state data, $1.5 million for AI education in K-12, and $2 million to foster AI startups and connect them with Princeton University’s AI Hub.
The legislature has commenced its summer recess, and formal legislative activities are expected to resume in September.
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