NJ State Budget Update

On Monday, after passing the legislature, Governor Murphy signed his final State Budget into law. The $58.8 billion budget maintains a full pension payment and promises to send more than $12 billion to aid the state’s K-12 schools. This budget dips into State reserves to support a structural deficit that has expanded above the levels since the start of the year. This deficit is exacerbated by the federal funding cuts since Trump took office. Spending levels in the bill exceed revenue by $1.5 billion.

Impacts on State Grant Funding

The budget supports numerous grant programs across various departments from which municipalities or organizations serving municipal residents may be eligible for funding. A total of $19,804,512,000.00 has been budgeted for grant funding across all departments.

Major changes include:

• $190 million has been taken from the Board of Public Utilities’ Clean Energy Fund to aid NJ Transit and add to the State’s Budget Surplus. This could lead to a reduction in the amount of awards or award sizes for the NJBPU Clean Energy Program incentives.

• Instead of following the recommendations of the NJ Opioid Advisory Council Strategic Plan, which offers a broad array of uses for opioid settlement funds, including in new local housing, social service, and treatment programs, this budget directs this year’s funding amount of $45 million to four hospital systems. 

• Governor Murphy also signed S-4632/A-5812 which establishes a grant program in DOE for public schools to purchase and install bottle-filling stations and filtered faucets.

• The total Grants-in-Aid for the Department of Community Affairs includes $155,850,000 for FY 2026. This is a decrease from $190,591,000 appropriated in FY 2025. 

  • Local Recreation Improvement Grant funding has been reduced from $20 million to $10 million. The DCA awarded 480 grants in 2025, and it is expected that 360 grants will be awarded in 2026. 

Other grant program highlights:

• The total Grants-in-Aid for the Department of Environmental Protection is $2,485,000 (mostly appropriating unexpended funds from prior FY grant programs).

• The total Grants-in-Aid for the Department of Labor and Workforce Development is $81,995,000. 

  • This includes $2,325,000 for New Jersey Youth Corps and $750,000 for the New Jersey Opportunity Youth Coalition - YouthBuild Program.

• The total Grants-in-Aid for the Department of Law and Public Safety is $56,845,000.

  • This includes $7 million for the NJ Nonprofit Security Grant Program.

• The total Grants-in-Aid for the Department of State is $1,969,945,000.

  • Includes $31,900,000 for Cultural Projects.

• The total Grants-in-Aid for the Department of Transportation is $840,576,000.

  • Includes $8,000,000 for Local Aid and Economic Development Grants, $1,440,000 for Pedestrian Safety Grants, and more than $140,000,000 in Municipal Aid Grants.

The Aubrey Group will continue to provide updates to our clients as we learn more. While various State grant programs will become more competitive, reinvestment in these effective grant programs is a success.