Legislative analysts warn New Jersey surplus is large but eroding; structural deficit a concern

Summary

Office of Legislative Services told the Senate Budget and Appropriations Committee that a projected $6.3 billion year-end surplus for FY 2026 is substantial historically but will shrink if current trends continue; OLS and the executive branch differ modestly on revenue forecasts and flagged heightened uncertainty for FY 2026.

The Office of Legislative Services told the Senate Budget and Appropriations Committee on April 1 that New Jersey faces a substantial but shrinking budget surplus and a structural imbalance between recurring revenues and recurring spending.

"Since fiscal 24, state spending has exceeded and is anticipated to continue to exceed slowly growing revenue collections, a scenario that steadily erodes the state's relatively elevated reserves," Thomas Koenig, legislative budget finance officer, told the committee. Koenig said the state's projected year-end surplus would be "substantial by New Jersey's historical standards" but warned that, if current trends persist, the surplus could be nearly exhausted by the end of fiscal 2028.

The warning framed the committee's review because a diminishing surplus limits the state's cushion against shocks. "A large surplus provides protection against fiscal risks," Koenig said, but…

Legislative analysts warn New Jersey surplus is large but eroding; structural deficit a concern

Summary

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