In Trenton today, testimony from the big two on Governor Murphy's proposed $58 billion state budget.

State Treasurer Liz Moyo and top representatives from the nonpartisan Office of Legislative Services, who each offered their own assessment and forecasts on the spending plan.

It's all as New Jersey faces economic headwinds due to federal cuts and looks to introduce about $1,000,000,000 in new taxes.

Senior correspondent Brenda Flanagan is at the State House as part of our new reporting project Under the Dome, exploring the state government and its impact on New Jersey.

TRENTON lawmakers gathered around their version of the kitchen table to hash out how much money they'll have to spend on the next state budget for casts from the nonpartisan Office of Legislative Services urged caution, warning the governor's $58 billion budget proposal spends about $1,000,000,000 more than New Jersey will raise in projected revenues.

In layman's terms, this budget spends more than it takes in, correct?

Correct.

Since fiscal 24 states, spending has exceeded and is anticipated to continue to exceed slowly growing revenue collections, a scenario that steadily erodes the state's relatively elevated reserves.

Oh else estimates current spending levels would burn through Jersey's current $6 billion surplus by 2028.

And while both oil s and the State Treasurer generally agree on projected revenue estimates, the economic outlook remains highly volatile.

Both the executive analysts are optimistic about fiscal 25 revenue.

Fiscal 26, however, is more complicated, while the broader state economy remains on stable footing.

Volatility in capital markets, shifting consumer behavior and potential policy shifts could adversely impact revenue collections.

Stock market unpredictability concerns.

The Senate Budget Committee chairman, Paul Sarlo, pointed to headlines of sagging profits on Wall Street, an important revenue source for New Jersey.

Our revenues are driven by gross income tax write.

We use the acronym gate predominantly by folks in the northern part of the state.

Wall Street Bonuses.

Wall Street income.

Senators also raised red flags about potentially deep cuts in federal funding.

State Treasurer Liz Moyo noted the Trump administration's already frozen hundreds of millions of dollars funds the state spent expecting to be reimbursed.

We'll get the notice at 5:00 and will say effective today or yesterday.

You need to stop spending this money.

The potential hit to our budget and our programs, I should say, could be drastic.

So that is a major, major concern for all of us as we navigate this budget.

It's enormous.

We're talking billions upon billions of dollars per year.

Agree to this.

Right.

And so the only choice at that point would be to find the money elsewhere.

Moyo also noted state health benefits plans will require another massive rate increase.

She explained Murphy's budget does cap discretionary spending, but Republicans scoffed.

We're not going to leave the kids with Tourettes out there with no support.

We're not going to keep the the cuts to higher ed.

It's not going to happen.

And it was a wink and a nod.

The administration knows this.

They got to propose a budget that makes them look good.

But at the end of the day, it's phony.

Moyo said the governor's budget does raise $1,000,000,000 in new taxes and fees on alcohol, tobacco, online casino and sports betting and more revenue raisers that could help fill that projected budget gap.

These changes will ensure we are able to serve the people of New Jersey and fulfill our obligations while at the same time reducing the structural budget gap.

But Sarlo says there's little support for tax hikes in the legislature.

I'm quite confident I will not be supporting them and they will not be part of a final budget document.

Again, the biggest uncertainty remains drastic budget cuts by the federal government.

Senator Sarlo said worst case scenario, lawmakers can pass a budget by June ten, then return to rebalance it if necessary.

At the statehouse in Trenton, I'm Brenda Flanagan, NJ Spotlight News.

This program is made possible in part by the Corporation for Public Broadcasting, a private corporation funded by the American people.