Treasury outlines FY‑26 budget with record K‑12 aid, full pension payment and $6.3B surplus

Treasurer presented Governor Murphy’s proposed fiscal year 2026 budget, saying the plan keeps record support for public schools, fully funds pension obligations and proposes $4.3 billion in property tax relief while projecting a $6.3 billion surplus.

The Treasurer said the FY‑26 budget includes a proposed $12.1 billion for K‑12 education, a proposed $1.27 billion for preschool aid and a proposed actuarially determined pension payment of $7.2 billion. She told the committee the administration intends to cap large year‑to‑year drops in major school aid categories so “K to 12 state aid will not decrease by an amount greater than 3% of the prior year's state aid.”

The nut graf: the budget seeks to balance continued investments — notably in schools and pensions — with restraints on discretionary spending while warning of financial risk from possible federal reductions in programs such as Medicaid.

Treasury officials told committee members the FY‑26 executive appropriations total about $58.05 billion and that baseline state revenues are forecast at $56.8 billion, generating an estimated structural gap that the administration proposes to close in part with a mix of tax changes and roughly $1.9 billion of nonrecurring resources in the plan. The Treasurer said the proposed budget “incorporates nearly $2,000,000,000 in appropriation reductions” and that the administration sought to limit new discretionary spending as revenues and federal support become less certain.

The administration highlighted several priorities: a record K‑12 appropriation, continued steps toward universal pre‑K, a fifth consecutive full actuarial pension contribution and an expanded single property‑tax relief application (PAS‑1) intended to simplify access to multiple relief programs. The Treasurer noted the administration’s long‑term pension payments have totaled roughly $47 billion since 2018.

Committee members pressed officials on the budget's assumptions and the tradeoffs involved. Treasury said revenue forecasts include policy proposals scored into baseline estimates for FY‑26, and emphasized the numbers will be revisited in May after the spring filing season. The Treasurer also reminded the panel that the budget the governor signs in June will differ from the February proposal as the legislature and administration negotiate changes.

Ending: The Treasurer concluded by saying the administration will continue working with the legislature through the spring and that final numbers will be updated after the filing season and any federal actions affecting state receipts.