What does Gov. Sherrill’s 2027 budget mean for entrepreneurs in New Jersey?
Santiago Bermudez
The governor's first spending plan cuts red tape and backs minority-owned firms, then turns around and hits larger employers with new fees.
When Governor Mikie Sherrill unveiled New Jersey's Fiscal Year 2027 budget in Trenton on March 10, she pitched it as a plan to make the Garden State the best place in America to start and grow a business. For the state's smallest entrepreneurs — particularly those from minority and immigrant communities — she may have a point. For everyone else, the calculus is considerably more complicated.
The $60.7 billion spending proposal, Sherrill's first since taking office, arrives against a bruising fiscal backdrop. The proposal attempts to close a roughly $3 billion budget gap through a combination of spending cuts, new revenue from businesses, and government cost savings, while avoiding new taxes on individual residents. That means businesses are picking up much of the slack.
"This is an affordability budget, rooted in lowering costs for hardworking families and making state government more accountable to the people we serve," Sherrill said. "I'm cutting the structural deficit nearly in half, and making it easier to start and grow a small business in New Jersey."
The upside: real relief for the little guys
There is genuine substance in the pro-entrepreneur provisions. The budget commits $500,000 to expand technical assistance for minority- and women-owned business enterprises (MWBEs) seeking state contracts, a targeted investment aimed at a persistent disparity where minority-owned businesses are awarded substantially fewer government contracts.
Beyond the MWBE fund, the budget proposes reducing business filing fees, providing funding for additional staff at the New Jersey Business Action Center, maintaining funding for the Main Street Recovery Fund, and supporting additional staffing at NJDEP to expedite permitting, along with creating a public permit dashboard. For a founder trying to break ground on a new facility, that last item alone could be worth six figures in saved carrying costs.
The downside: new costs that sting on the way up
The budget's revenue side tells a different story. To plug the fiscal hole, Sherrill is proposing to temporarily cap Net Operating Loss deductions at $1 million for three years — estimated to raise $485 million — and to limit the Alternative Business Calculation deduction to small businesses as it was originally intended when enacted in 2011, estimated to raise $120 million.
On the ABC deduction, NJBIA Chief Government Affairs Officer Christopher Emigholz warned that while it may be well intentioned to focus the tax program on smaller businesses, the proposed threshold is too low because it excludes businesses with $1 million in gross revenue and could discourage entrepreneurial investment.
Then there's the provision generating the most heat. Sherrill's budget proposes to fine large employers with workers on Medicaid $145 million by charging companies fees of up to $725 annually for every person covered by the public health insurance program. The measure is aimed squarely at large retailers and logistics firms that Sherrill says are effectively shifting healthcare costs onto taxpayers, but critics note the 50-employee threshold catches growing mid-market companies that are nowhere near that scale. Emigholz called it "perhaps the most troubling part of the budget proposal for the business community."
Business groups: cautiously mixed
The reaction from New Jersey's organized business community has been carefully balanced. The New Jersey Chamber of Commerce praised the permitting overhaul and the Business Action Center investment, while simultaneously warning that policies increasing costs for employers risk making New Jersey less competitive than other states, particularly for larger companies that provide significant employment and investment.
The Statewide Hispanic Chamber of Commerce, representing more than 150,000 Hispanic-owned businesses, was notably more enthusiastic, praising the focus on protecting true small businesses, expanding access to resources, and ensuring that entrepreneurs in minority and immigrant communities have the support they need to thrive.
The bottom line
For the state's earliest-stage entrepreneurs — those navigating procurement systems for the first time or trying to get a permit approved for a new storefront — Sherrill's budget offers real, if modest, wins. For companies that have crossed the threshold from startup to employer, the calculus shifts. New fees, tighter deductions, and a still-demanding regulatory environment mean that scaling in New Jersey remains an expensive proposition.
Whether the budget's fiscal discipline translates into the kind of stability that makes founders and investors choose New Jersey over competing states remains the open question. Sherrill has one budget to start making that case.
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Santiago Bermudez is the founder of Entrepreneurship UNPKD, currently serving as the organization’s General Director.
