Sprinkled throughout a lengthy task force report detailing ways to enhance state-funded property-tax relief, including programs for senior citizens, is the phrase “subject to appropriation.”
While easy to dismiss it as budget jargon, the phrase serves as an important reminder that the state’s most popular relief programs operate on a year-to-year basis and depend on the level of funding approved each year by the governor and lawmakers.
Earlier this year, Gov. Phil Murphy proposed a spending plan for the fiscal year that begins July 1 that sets aside more than $3.5 billion for direct property-tax relief programs.
Assuming lawmakers go along with his recommendations, there will be enough funding in the new budget to cover the latest round of Anchor benefits, which are set to go out later this year to eligible homeowners and renters.
Senior Freeze reimbursements, which go out annually to eligible senior and disabled homeowners, would also be fully funded for another year under Murphy’s plan.
And Murphy, a second-term Democrat, is also planning to set aside $200 million for a new program called Stay NJ that, under plans outlined in the 101-page task force report released late last month, would come online for eligible recipients beginning in early 2026.
‘Subject to appropriation’
But under the state Constitution, it’s lawmakers that have the power to draft the annual appropriations bill, including any allocations for property-tax relief. Then it’s up to the governor to accept or veto their final recommendations.
That means the exact levels of funding for property-tax relief in the 2025 fiscal year remain “subject to appropriation” until the annual spending bill is passed by lawmakers and signed into law by Murphy in the coming weeks.
‘Now more than ever, it’s clear that Trenton Democrats have no plan on how to fund the property-tax relief program they promised our residents.’ — Senate Minority Leader Anthony Bucco (R-Morris)
Meanwhile, what happens in 2026, including with the promised Stay NJ program, which could cut some seniors’ property-tax bills in half, is also still “subject to appropriation,” as the task force report indicates.
Moreover, detailed in the report’s discussion of Stay NJ is another important qualifier that was written into the law enacted by Murphy and lawmakers last year that established the new program and the task force to study its feasibility.
This qualifier requires the governor and lawmakers to first fund a series of “prerequisite” line items in the annual budget before they can consider the paying out of the promised Stay NJ benefits.
Prerequisites before any benefits can be paid
Under the 2023 law, the prerequisites are full funding of the state’s K-12 school-aid formula; full funding of the state’s actuarially determined obligations to the public-worker pension funds; full funding of $250 property-tax deductions for seniors and veterans, and the maintenance of a budget surplus that is equal to 12% of annual appropriations.
While the law can always be changed in the future, page 53 of the task force report includes a key warning for those who may already be banking on receiving Stay NJ benefits, starting in 2026.
From time to time, funding for property-tax relief benefits has been pulled back in the middle of a fiscal year to close a budget shortfall.
“Deferral/Delay of Stay NJ may occur if… Funding pre-requisites are not met,” the report says. “Stay NJ cannot obstruct full funding of the pre-requisites.”
For the past year, Murphy and fellow Democrats, who control the Legislature, have been touting their work to establish the Stay NJ program.
Republican red flags
But Republican lawmakers, currently in the minority in both the Assembly and Senate, have been raising red flags, most recently highlighting how the task force report doesn’t indicate at all how a full year’s worth of Stay NJ benefits, which is estimated to cost $1.2 billion, will be funded.
“Now more than ever, it’s clear that Trenton Democrats have no plan on how to fund the property-tax relief program they promised our residents.” said Senate Minority Leader Anthony Bucco (R-Morris).
Meanwhile, even after funding for a property-tax relief program is appropriated by a governor and lawmakers, that’s not necessarily the final word when it comes to the paying out of such benefits by the state.
Payment disruptions
From time to time, funding for property-tax relief has been pulled back in the middle of a fiscal year if it is needed to close a budget shortfall that, under the state Constitution, cannot be pushed into another fiscal year.
This last occurred during the first year of the COVID-19 pandemic, when $135 million that had been appropriated by Murphy and lawmakers to cover property-tax relief benefits distributed through the Homestead program — which was a predecessor of Anchor — were “deappropriated” as part of the administration’s broader efforts to close a big budget hole.
In many ways, Anchor still operates with the imprint of these types of prior funding disruptions. The round of Anchor benefits due to be paid out later this year will correspond with property taxes paid and income earned by eligible residents in 2021, according to budget documents.
Among its many recommendations, the task force is suggesting a policy change that would bring Anchor more up to date by the middle of next year as part of efforts to streamline the overall application process, especially for seniors.
But as the report makes clear, doing so could result in skipping altogether the payout of benefits that would correspond with at least one full tax year, costing some as much as $1,750.
“By aligning the eligibility year for all of the programs, there will be cases in which individuals lose an ANCHOR benefit,” the report says.
