New Jersey’s budget basics

According to the National Association of State Budget Officers (NASBO), New Jersey’s total expenditures in fiscal year (FY) 2021 were $75.1 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2021 were $2.7 trillion, ranging from $4.7 billion in Wyoming to $512.8 billion in California.

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, New Jersey’s combined state and local direct general expenditures were $94.2 billion in FY 2019 (the most recent year census data were available), or $10,595 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $10,161.

New Jersey’s largest spending areas per capita were elementary and secondary education ($3,201) and public welfare ($2,138). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

New Jersey’s combined state and local general revenues were $108.8 billion in FY 2019, or $12,231 per capita. National per capita general revenues were $10,563. New Jersey uses all major state and local taxes. New Jersey’s largest sources of per capita revenue were property taxes ($3,509) and federal transfers ($2,099). Property tax revenue accounted for 29 percent of New Jersey’s combined state and local general revenue in 2019. New Jersey was the second-most reliant state on property taxes. Despite perpetual debates, the state has not been able to agree on property tax reform.

New Jersey’s politics

Governor Phil Murphy, a Democrat, was elected in 2021 with 51 percent of the vote. The next gubernatorial election is in 2025.

Democrats control both the State House (46 Democrats to 34 Republicans) and Senate (24 Democrats to 16 Republicans). Control of the governor’s mansion and each house of the legislature gives Democrats a trifecta in New Jersey. All New Jersey State House seats are on the ballot in 2023 because members serve two-year terms. Senators serve a combination of two- and four-year terms during each decade’s legislative district apportionment cycle. This 2-4-4 term system ensures all Senate seats are up for election after new legislative district boundaries are drawn. All senators are therefore up for election in 2023.

New Jersey’s budget institutions, rules, and constraints

New Jersey uses an annual budget. The legislature must pass a balanced budget, but it can carry a deficit over into the following year. New Jersey further limits spending growth with a budget rule based on personal income growth. The rule is binding and requires a legislative supermajority or vote of the people to override. New Jersey limits total authorized debt incurred by the state, but not debt service.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

New Jersey’s current budget

Governor Murphy released his FY 2023 budget proposal in March 2022 and gave his state of the state address in January 2022.

New Jersey enacted its FY 2022 budget in June 2021. The enacted budget included $46.4 billion in general fund spending.

Under the American Rescue Plan, New Jersey will receive $6.2 billion in direct state fiscal aid and $3 billion in local government aid from the federal government. As of January 2022, New Jersey had spent part of its ARP funds on education spending, public health programs, economic development, and capital construction.

According to NASBO, New Jersey’s recent expenditure totals (general fund spending/total spending, including federal transfers) were:

• FY 2021: $40.5 billion/$75.1 billion

• FY 2020: $37.1 billion/$66.8 billion

• FY 2019: $37.2 billion/$64.2 billion

For more on New Jersey’s budget, see

• the New Jersey Department of the Treasury and
• the New Jersey Office of Legislative Services.

New Jersey’s economic trends

New Jersey’s per capita income (per the Bureau of Economic Analysis) was $74,805 in 2021, ranking fifth among the states. It was above both the national average of $63,444 and the Mideast regional average of $71,946. The state’s median household income (five-year estimate) was $85,245 in 2020, ranking second among the states and above the national average of $64,994. New Jersey’s poverty rate was 9.7 percent in 2020 (five-year estimate), below the national rate of 12.8 percent.

Although New Jersey’s averages tell a story about the entire state, New Jersey is composed of diverse localities. For example, the city of Camden’s median household income was $28,623, and its poverty rate was 33.6 percent; the city of Ridgewood’s median household income was $178,958, and its poverty rate was 3.3 percent.

New Jersey’s unemployment rate historically tracks the national average. (See how COVID-19 is affecting state employment and earnings data.)

Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. In New Jersey, the average unemployment rate in 2021 was 5.5 percent for white residents, 9.6 percent for Black residents, and 7.1 percent for Hispanic or Latino residents. (This is preliminary data. See the 2020 data for a more detailed breakdown of state unemployment rates by race and ethnicity.)

The major industries that contributed the most to New Jersey’s gross domestic product (GDP) in 2020 were finance, professional services, government, social services (i.e. health and education), and manufacturing. Professional services contributed more to New Jersey’s GDP than it did to the nation’s and region’s GDP, while finance and government were less important to New Jersey than they were to the nation and region in 2020.

Looking at more specific industries, among those that accounted for at least one percent of New Jersey’s GDP in 2019, wholesale trade produced more for the state than for the nation, contributing 8.5 percent to New Jersey’s GDP and 5.9 percent to the nation’s. Other industries that overperformed in New Jersey relative to national averages in 2019 were chemical manufacturing; real estate; miscellaneous professional, scientific, and technical services; and management of companies.

New Jersey’s demographics

As of July 2020, New Jersey’s population was 8,882,371. That was up 0.9 percent from 2010. The state’s population growth rate was slower than than the nation’s 6.5 percent growth over the same period. The Urban Institute estimates the state’s population will increase 8 percent between 2010 and 2030, less than the nation’s estimated growth rate of 16 percent.

Additional resources

• The State and Local Finance Initiative’s Backgrounders explain the tax and spending issues highlighted in these briefs.
• The State Economic Monitor presents updated data and customized visualizations of state economic indicators.
• State and Local Finance Data: Exploring the Census of Governments allow users to sort, customize, and download the Census of Governments State and Local Finance series data featured in these summaries.
• The State Tax and Economic Review series provides quarterly reports on state tax collections and underlying economic trends in all 50 states.
• The Urban Institute’s State Tax Data Subscriptions provide access to up-to-date revenue data in all 50 states.