New Jersey Gov. Phil Murphy, a Democrat, celebrated his administration’s record of fully funding the state’s pension obligations.

Bloomberg News

In his final budget address, New Jersey Gov. Phil Murphy urged the legislature to lower the cost of living, seize the state’s economic momentum and prioritize fiscal responsibility. 

The Democrat is term-limited, with voters choosing a replacement in November.

Murphy proposed funding for education and pensions but capped most other discretionary spending. The total budget proposal was $58.1 billion. 

“When I entered office, we inherited a budget with a paltry $400 million surplus,” Murphy said in his Feb. 25 speech. “But, with our final budget proposal, we are going to make sure we leave the next governor a surplus that is more than 15 times greater.”

The legislature’s minority Republicans argued the budget has a deficit and includes too many tax hikes.

“Governor Murphy is unwilling to make the tough decisions to balance the budget,” said Assembly Budget Committee member Al Barlas in a press release. “He proposed more than a dozen tax hikes in this budget and it still won’t pay for his spending habits. That’s being careless with other people’s money.”

But Murphy argued in his address that he’s been historically attuned to fiscal responsibility. 

Murphy celebrated his administration for being the first in 25 years to fully fund the state’s pension system, and criticized the state’s previous leaders for “short-term, sloppy, and selfish” decision-making.

“If the state had made the full payment into our pension system, every year, over the past quarter-century, the cost of doing so, this year, would be roughly $1 billion,” Murphy said. “But, because we were stuck with yesterday’s bar tab, it now costs us around $7 billion, every year, to make the full payment into our pension system.”

The decades of unfunded pension obligations cost the state $30 billion over the past five budgets, Murphy added. 

He also touted the state’s economic growth, which it achieved through deficit spending in the wake of the COVID-19 pandemic. 

“In the past three years alone, New Jersey has received seven credit rating upgrades after a generation of downgrades,” Murphy said. “But now that the pandemic is behind us, we are fully committed to meaningfully shrinking the structural deficit.”

The governor proposed funding increases for a few key areas — notably education, tax relief and transportation. 

Murphy called for $12.1 billion for K-12 education, a figure he called “record-breaking,” and $1.3 billion for pre-K. 

“We are also going to reduce volatility in the school funding process by ensuring that no school district sees a steep reduction in state aid from one year to the next,” Murphy said.

Murphy celebrated last year’s increase in funding for the state’s troubled public transit system and proposed more funds. 

“With our proposed budget, we are going to move forward in fully modernizing NJ TRANSIT by providing funding to begin replacing every single outdated bus and rail car that remains in the agency’s fleet,” Murphy said. 

Murphy’s address also highlighted lower-budget items for political priorities: he seeks to double the line-item for the Office of New Americans to $1 million, add an extra $50 million to a fund for electric vehicles, and launch a new program incentivizing OB/GYNs to move to New Jersey.

But despite these increases, Murphy said, “our budget will largely cap all new discretionary spending.” 

Moreover, the proposal contains a $6.3 billion surplus, which Murphy hopes will “help guard us against unforeseen challenges, including the uncertainty that has swept over Washington.”