As New Jersey enters the final stretch of its budget process, policymakers in Trenton face a familiar temptation: close gaps, fund short-term priorities and declare success — without addressing the structural issues that continue to undermine the state’s long-term fiscal health.
New Jersey deserves more than another status quo budget that keeps the public in the dark, is rushed through at the last minute, and finalizes tens of billions of dollars behind closed doors with minimal public input and accountability.
We have to confront reality: New Jersey is too expensive
It is time to confront the underlying challenges that, year after year, make New Jersey one of the most expensive and economically strained states in the nation.
First, the state’s debt burden remains among the highest in the country. New Jersey carries over $200 billion in total obligations, including bonded debt and unfunded pension and retiree health liabilities, each of which exceeds $75 billion. Years of borrowing to finance routine expenses have left taxpayers on the hook for massive long-term costs, limiting flexibility and crowding out future investments in schools, infrastructure, modernized state computer and efficiency systems, and other priorities. While recent revenues have been strong, they have not been used to meaningfully reduce these liabilities or improve the effectiveness of government operations. Instead, New Jersey continues to rely on one-time fixes, outdated systems, and optimistic projections.
Second, New Jersey’s school funding formula, while well-intentioned, has become increasingly disconnected from enrollment trends and local needs. Despite ranking among the highest-spending states on K–12 education, the system continues to produce inequities and unpredictability for both students and taxpayers. Some districts experience steep cuts while others continue to receive aid levels that no longer reflect current realities. A funding system that lacks transparency and predictability makes it difficult for communities to responsibly plan their own budgets and undermines confidence in the fairness of state support.
Third, last-minute additions to the budget that benefit narrow interests (sometimes referred to as “pork” or “Christmas tree” spending) continue to raise concerns about transparency and accountability. Recent GSI analysis shows that discretionary spending inserted into the budget has totaled hundreds of millions annually, including $742 million in discretionary spending across more than 960 line items in FY 2026, according to Garden State Initiative’s NJBudget.com database and our report, “How Earmarks Undermine New Jersey’s Competitiveness and Affordability.”
These appropriations are often enacted without a clear public process or consistent standards for oversight, performance measurement or evaluation. As a result, resources may be directed away from broader statewide priorities without a clear understanding of their long-term impact.
Finally, the state must take seriously the need for health care and pension reform. These obligations represent one of the largest and fastest-growing components of the budget. In fact, pension and retiree health liabilities alone account for well over $150 billion of the state’s total obligations. Without thoughtful reforms that balance commitments to workers with affordability for taxpayers, these costs will continue to crowd out essential services and drive future tax increases. At a minimum, policymakers should explore options for new employees and future benefit structures that reflect more modern approaches to retirement savings and health coverage, including models that offer greater portability and flexibility similar to those found in the private sector.
None of these challenges are new. But the consequences of inaction are becoming more severe with each passing year. High taxes, slow population growth, and outmigration are not abstract concerns, they are signals that New Jersey’s current trajectory is unsustainable.
Solutions to shore up NJ’s finances are right in front of us
The good news is that solutions are within reach:
- Lawmakers can prioritize paying down debt when revenues exceed expectations.
- They can modernize the school funding formula to reflect current enrollment and community needs.
- They can impose greater transparency and limits on discretionary spending.
- And they can pursue reforms that stabilize health care and pension costs while honoring existing commitments and ensuring long-term sustainability.
New Jersey has the resources, talent and economic foundation to thrive. But that future depends on whether leaders are willing to move beyond short-term budgeting and address the structural challenges that have been ignored for too long.
As the budget deadline approaches, the question is not whether the numbers add up this year. It is whether the decisions made today will put New Jersey on a sustainable path for the years ahead.
