New Jersey Republicans are accusing Gov. Phil Murphy of violating the state constitution by misusing property tax relief funds for projects that do not lower property taxes.
They claim that at least $300 million in the current budget was allocated to politically chosen projects instead of being used to lower property taxes for residents.
With Murphy set to present his next budget proposal on Tuesday in Trenton, GOP lawmakers are warning that if the same pattern continues, they will file a lawsuit on behalf of taxpayers, municipalities, and schools that have lost critical funding.
The dispute centers on the state’s income tax revenue, which must be placed in the Property Tax Relief Fund under the New Jersey Constitution and used exclusively to reduce or offset property taxes.
Since its creation in 1976, these funds have historically been distributed based on a formula, often considering the value of untaxed utility properties and other tax-related factors.
However, Republicans argue that Murphy’s recent budgets have abandoned these formulas, diverting millions of dollars to discretionary spending that benefits Democratic-controlled districts.
A letter sent Friday by five Republican state senators—Minority Leader Anthony Bucco of Morris County, Declan O’Scanlon of Monmouth County, Michael Testa of Cumberland County, Doug Steinhardt of Warren County, and Carmen Amato of Ocean County—outlines their concerns in detail.
They state that in previous years, New Jersey governors followed the constitutional requirement by distributing income tax revenue through a formula-based approach.
But last year, Murphy and the Democratic-controlled legislature approved a budget that allocated $100 million from the Property Tax Relief Fund to projects that had no direct connection to lowering property taxes.
The letter specifically identifies three spending items from last year’s budget that Republicans say violate the constitutional rules:
- $10 million for the Hudson County jail
- $8.5 million for various economic development programs in Middlesex County
- $5.5 million for educational infrastructure projects in Middlesex County
The senators argue that while these projects may have merit, they should not be funded with constitutionally required money to provide property tax relief.
They claim this misallocation deprives taxpayers of the relief they are entitled to and favors specific regions over others based on political interests rather than needs.
Republicans have also raised concerns about the increasing discretionary spending in recent state budgets.
The current budget includes about $700 million in spending that was added outside of the formula-based process.
The previous year’s budget had an even larger amount—$1 billion—allocated to special projects.
In Trenton, these discretionary additions are often called “Christmas tree items” because they provide lawmakers with funds for local projects in their districts.
While this practice has existed under previous administrations, Republicans argue that Murphy’s approach has significantly expanded these allocations, further moving away from the intended use of income tax revenue.
The governor’s office has rejected these allegations.
Murphy’s spokeswoman, Stella Porter, stated that his budget follows the same structure used by governors from both parties in previous decades.
This response suggests that the administration believes these allocations are part of long-standing budget practices rather than a violation of state rules.
Top Democratic leaders in the legislature, including Senate President Nick Scutari of Union County and Assembly Speaker Craig Coughlin of Middlesex County, have not publicly commented on the issue.
Beyond this budget dispute, New Jersey faces a $3.7 billion structural deficit, which means the state will spend considerably more than it collects in revenue.
Murphy has acknowledged this problem and has instructed state agencies to identify potential budget cuts.
He has also indicated that the state’s surplus could help close the gap, though it remains unclear how much of the surplus will be used and if it will be enough to cover the shortfall.
Murphy has defended his previous spending decisions by arguing that the state deliberately spent more than it collected in revenue to stimulate the economy following the COVID-19 pandemic.
However, he has also admitted that spending must be adjusted to restore financial balance.
The upcoming budget debate is expected to be highly contentious, especially in a major election year.
New Jersey voters will be electing a new governor and all 80 members of the state Assembly, making fiscal policy a top issue in political campaigns.
Property taxes remain a significant concern for residents, as New Jersey continues to have the highest average property taxes in the country.
Within the Democratic Party, candidates running to succeed Murphy are already focusing on economic issues.
U.S. Rep. Mikie Sherrill, a four-term congresswoman, has received an endorsement from the New Jersey League of Conservation Voters, a major environmental advocacy group, in her bid to become governor.
Another Democratic candidate has proposed giving $400 relief checks to lower- and middle-class residents to ease financial strain and push back against economic effects linked to former President Donald Trump’s policies.
As Murphy prepares to present his budget, the focus will be on whether he will revise his distribution of property tax relief funds or stick to a method that Republicans insist goes against constitutional guidelines.
If he does not make changes, Republicans may move forward with their lawsuit, adding more legal and political problems to an already complex budget cycle.
