Sherrill Administration Considers Cuts to Stay NJ Property Tax Relief Program

Gov. Mikie Sherrill’s administration has not ruled out cuts to the Stay NJ property tax relief program as it seeks ways to close a roughly $1.5 billion structural deficit, according to acting State Treasurer Aaron Binder.

Binder told the New Jersey Monitor that the Democratic governor, who took office last month, plans to focus on controlling state spending rather than boosting revenue in her first budget proposal. Sherrill is set to present her plan to the Legislature in early March.

“It’s really turning over every stone at this point and just looking every possible ‘where,’ every place in this budget we can find a potential cut,” Binder said in an interview. “And we have new cabinet members coming in, so in some cases, it’s a fresh set of eyes.”

The potential cuts come as Stay NJ begins its rollout across the state. The program, championed by Assembly Speaker Craig Coughlin (D-Middlesex), promises to cut seniors’ property tax bills in half, up to an inflation-tracking cap of $6,500.

The state announced last week that it issued its first Stay NJ payments, which will be distributed in quarterly installments. When the new fiscal year begins July 1, the program’s annual cost is expected to reach about $1.2 billion, according to state projections. Like some expiring one-shot revenue sources, the program is among the items set to expand New Jersey’s structural deficit.

Binder said the administration will not treat Stay NJ differently than any other state spending when evaluating potential cuts.

“We are looking at finding cuts everywhere in the budget,” he said, adding, “Wherever we can find efficiency, find cuts that make sense, we’re looking at that.”

Coughlin reiterated his commitment to funding the property tax relief program in the coming budget cycle in response to the administration’s comments.

“We were thrilled to see Governor Sherrill’s message of affordability resonate, and it’s exactly why we’ve championed programs like Stay NJ for years,” Coughlin said in a statement. “We look forward to working with the Governor to ensure affordability and property tax relief remain a priority.”

The treasurer confirmed that the administration would not seek to close the state’s structural deficit through broad-based tax hikes, reiterating comments he made during a confirmation hearing earlier this month. Binder said tax hikes would be incompatible with the affordability mission Sherrill campaigned on.

However, the state could still seek to boost revenue by tightening enforcement of some tax collections and through what Binder called creative ways to use state assets. These solutions could include renovations to state-owned properties that would eliminate the need to lease office space from the private sector or the sale of some state assets, according to Binder.

“There’s a lot of other directions she’s sending her cabinet in to find resources, to find ways to balance this budget without focusing on tax increases,” he said.

The administration has not yet set a specific goal for reducing the state’s structural deficit, which may expand due to spending approved during the current fiscal year, according to Binder. However, he said the aim is to reduce the deficit every year, partly to satisfy ratings agencies that have rewarded New Jersey’s improving fiscal stewardship with recent ratings upgrades.

It remains unclear what degree of cuts the administration will seek for the coming July-to-June fiscal year or what specific costs Sherrill’s first budget proposal will target. New Jersey’s constitution requires its budget to be balanced, though the state can run deficits for a limited period.

The budget discussions come as New Jersey faces ongoing fiscal challenges while attempting to maintain programs aimed at improving affordability for residents, particularly seniors facing high property tax burdens.