On June 22 Governor Mikie Sherrill, Senate President Nick Scutari, and Assembly Speaker Craig Coughlin announced a tentative $60.7 billion budget agreement for Fiscal Year 2027. The agreement cuts the structural deficit in half from approximately $3 billion, continues full pension funding, and increases the surplus.

Republicans panned it as the press release landed. Senate Republican Budget Officer Declan O'Scanlon, Senator Michael Testa, Senator Doug Steinhardt, and Senator Carmen Amato Jr. accused Democrats of hiding $1 billion in tax increases, directing bailouts to Jersey City and Newark, stuffing pork into select towns, and redirecting $2 billion in unspent COVID funds without public disclosure. 

The GOP lacks the votes to stop the budget.

At the same time, some of their claims have material grounding. The core municipal aid formula stayed flat at $1.454 billion, according to the Budget in Brief, while Transitional Aid to Localities surged to $256.5 million. That funding is a competitive grant for distressed municipalities, rather than a formula entitlement. The flat formula aid and surging Transitional Aid create a two-tier system: a handful of cities compete for discretionary grants while the majority receive flat aid with no growth. Jersey City Mayor James Solomon requested $150 million in transitional aid at a March 30 Senate Budget Committee hearing. Most municipalities receiving formula aid saw no growth in the total pool.

The legislature will debate the budget Thursday and vote on Monday. The FY2027 Appropriations Act has not yet been introduced, and NJ.com reports the bill may not appear until Friday, June 27.

Deal Promises More Than it Budgets

The deal preserves StayNJ's $6,500 property tax credit for seniors, reversing the governor's March cut to $4,000 that Coughlin called "too low, candidly." It also changes eligibility and adds $100 million. The original program was projected to cost $1.2 billion, according to NJPP. Sherrill's March proposal budgeted $642.1 million for the $4,000 cap; Treasury estimated the $6,500 version would cost $344 to $372 million more, according to the NJ Monitor.

The visible appropriation is hundreds of millions short of what Treasury estimated the program would cost at a $250,000 income threshold, but the final eligibility requirements and prior-year balances remain unknown until the bill text is introduced. The spending plan allocates nearly $4.2 billion across StayNJ, ANCHOR and Senior Freeze — the largest direct property tax relief investment in state history, according to the Sherrill administration.

Lawmakers preserved the Child Tax Credit at current levels, according to the joint statement. The administration calls it an expansion. The fiscal plan budgets $207 million for the credit, which reaches up to $1,000 per child under age 6 for low-income households. The Legislature raised the credit from $500 to $1,000 in 2023. The agreement maintains the $1,000 level.

The agreement is also silent on whether a $145 million employer healthcare assessment survived. Sherrill's original proposal sought the assessment from employers with 50 or more workers on NJ FamilyCare, according to the Budget in Brief. The average state cost for covering this population is estimated at $1,700 per person. 

In a June 19 letter to the legislature, a coalition of 13 business groups, nonprofits, and employers called the proposal "likely illegal" under ERISA, the federal law governing employer benefit plans, according to NJBIA. Signatories included the Hospital Collaborative of NJ, Shore Medical Center, and Six Flags Great Adventure. The coalition cited a similar program in Massachusetts, which the letter said was repealed after two years.

Federal Costs and Pension Debt Shape the Spending Plan

New Jersey will absorb more than $102 million in direct federal cost shifts, according to the Budget in Brief. The Trump administration cut SNAP administrative funding, shifting $61 million in costs to the state. The state also lost $26.4 million in federal matching funds for NJ FamilyCare. Washington eliminated ACA subsidies, dropping the share of residents with sub-$10 premiums from 48 percent to 10 or 11 percent, according to the New Jersey Department of Banking and Insurance. The budget absorbs these federal cost shifts. The surplus increase provides a cushion against further federal withdrawal.

State Treasurer Binder told the Assembly Budget Committee on April 6 that federal COVID stimulus funds are exhausted. The New Jersey Policy Perspective confirmed in January that the Debt Defeasance and Prevention Fund is empty. The state has burned through the one-time revenue tools that offset deficits.

The full $7.3 billion pension payment includes more than $500 million in debt service for pension bonds issued in 1997, according to Binder's April 6 testimony. The final payment is not due until Fiscal Year 2029, meaning that Sherrill's third budget will still pay for decisions made under the Whitman administration almost thirty years ago. 

The $7.3 billion line is non-negotiable. Credit rating agencies Moody's, S&P and Fitch expect the full payment; underfunding would trigger a downgrade, raising the state's borrowing costs on billions in bonded debt. The Budget in Brief shows the pension line increasing by $101.3 million from the prior year.

Bill Text Will Reveal the Specifics

The text of the FY2027 Appropriations Act is not yet public. When it is, the text will show whether the employer healthcare assessment survived, whether StayNJ is fully funded, and whether the GOP's bailout allegations have material grounding. The vote is Monday, but Friday's numbers are the real story.

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Sources

• Binder, Aaron, State Treasurer, "Assembly Budget Committee Testimony" (April 6, 2026)

• Governor Mikie Sherrill, Senate President Nick Scutari, and Assembly Speaker Craig Coughlin, "Joint Statement on FY2027 Budget Agreement" (June 22, 2026)

• Insider NJ, "New Jersey Legislature Reaches $60.7 Billion Budget Deal" (June 22, 2026)

• Jersey Vindicator, "Sherrill, Coughlin, Scutari Reach Budget Deal" (June 23, 2026)

• New Jersey Department of Banking and Insurance, "ACA Subsidy Impact Report" (April 2026)

• New Jersey Department of the Treasury, "FY2027 Budget in Brief," FY2027 (March 2026)

• New Jersey Globe, "Sherrill, legislative leaders have a budget deal" (June 23, 2026)

• New Jersey Legislature, Senate Budget Committee, "Public Hearing Transcript" (March 30, 2026)

• New Jersey Policy Perspective, "Five Budget Time Bombs" (January 15, 2026)

• NJ 101.5, "NJ lawmakers reach budget deal" (June 22, 2026)

• NJBIA, "Coalition Letter Opposing Medicaid Assessment" (June 19, 2026)

• NJBIZ, "Lawmakers reach $60.7B budget deal" (June 23, 2026)

• NJ.com, "N.J. Legislature reaches $60.7B budget deal" (June 22, 2026)

• NJ League of Municipalities, "FY2027 Budget Summary" (April 22, 2026)

• NJ Monitor, "Budget proposal would cut StayNJ benefit" (June 3, 2026)

• O'Scanlon, Declan, Michael Testa, Doug Steinhardt, and Carmen Amato Jr., Senators, "Statement on FY2027 Budget Deal" (June 22, 2026)

• Rowan University Sweeney Center, "StayNJ Cost Analysis" (June 2024)