New Jersey faces $3 billion annual deficit starting fiscal 2027 without budget modifications

The Assembly Budget Committee of the New Jersey Legislature convened on April 2, 2025, to discuss critical financial projections and budgetary concerns for the upcoming fiscal years. A significant focus of the meeting was the anticipated budget deficit, which is projected to reach approximately $3 billion by fiscal year 2027. This projection is based on current spending trends and revenue collections, indicating a potential depletion of the state's surplus by the end of fiscal year 2028.

Committee members highlighted the importance of the Stay NJ program, which mandates full funding of pension obligations and a surplus of 12%. However, it was noted that the requirement for fiscal year 2025 has already been suspended. The discussion raised questions about the feasibility of adhering to the Stay NJ requirements in future years without modifications to the statutory language.

The committee also explored the implications of a proposed increase in spending of over $1 billion for the current year. Members debated whether not implementing this increase could extend the drawdown of the surplus for an additional year. It was emphasized that any efforts to lower spending or increase revenues would strengthen the surplus position.

In summary, the meeting underscored the challenges facing New Jersey's budget, particularly regarding the balance between spending priorities and maintaining a healthy surplus. The committee's discussions will likely influence future legislative decisions as they navigate these financial hurdles.