New Jersey budget forecasters say tax collections are likely to rise by $785 million over what Gov. Phil Murphy predicted when he introduced the state budget three months ago, budget analysts said Wednesday. The Office of Legislative Services’ positive revenue projection is based on the current and coming fiscal years. The analysis likely gives state lawmakers another reason to reject some of the most unpopular tax increases the governor has proposed, which would add an estimated $1.2 billion in new taxes. Both Republicans and Democrats have spoken against most of the proposed tax increases, especially those on leisure activities, like bowling, health clubs and golf driving ranges. Sen. John Burzichelli, D-Gloucester, also has questioned the need for a hike in online gaming and sports betting. During a marathon budget hearing at the Statehouse, Assembly Appropriations Committee Chairwoman Eliana Pintor Marin, D-Essex, told NJ Advance Media she was dubious of the $2-a-truck tax on warehouse deliveries. State Treasurer Elizabeth Muoio told the Assembly Appropriations Committee on Tuesday that her team forecast even higher revenues for the coming year than what OLS proposed, at about $332 million more. “Taxpayers had a good year in 2024 and we are seeing that in the April collections,” she said. Still, budget analysts and Treasury staff cautioned that uncertainty abounds. Even this bump in revenue collections won’t help the financial onslaught that is likely coming from Washington, they said. A Congressional committee has approved a bill that would slash billions in Medicaid funding for every state. New Jersey anticipates losing at least $2 billion in federal funding as Congressional Republicans look to help pay to continue tax breaks enacted during President Trump’s first term. As many as 700,000 could lose health care, Murphy administration sources have said. New Jersey holds a $6.3 billion surplus, representing about 10% of the entire $58.1 billion proposed budget for the fiscal year that begins July 1. Would the state spend down the surplus to offset Medicaid losses? The Treasurer wouldn’t say specifically, but noted: “The governor wants a significant surplus.” “This surplus would not be able to manage that kind of level of cut,” she added. Washington, which has focused on cutting the size of government since President Trump took office, has yet to come to a final solution on what will be in the federal budget in the fall. But state lawmakers have also warned they may have to redo New Jersey’s budget based on what‘s in the final proposal. “As you will recall, when we came to you in April, we highlighted the unusual degree of uncertainty that was affecting our forecasts for FY 2026,” said Oscar Mendez, the OLS Revenue and Economic Policy analyst. “In our view, the uncertainty, that existed in April remains largely unresolved, continuing to add unusual complexity to our revenue outlook for the upcoming year,” Mendez said. Muoio spoke broadly about with the pending “economic uncertainties looming in international trade,” her office reduced its anticipated gross income tax rate collections from 9.9% to 2.7%. Both of them also maintained a fear of the uncertainty that tariffs would bring — a sentiment that is shared within the state Senate. In light of the revised revenue estimates, Assemblywoman Nancy Munoz, R-Union, quizzed the treasurer and the budget analysts about whether added tax revenue should be used to help close the $1.2 billion budget deficit. She also asked whether it was responsible for the Legislature to add more spending, which is what happens without fail every year before the budget is adopted in June. Legislative Democrats added last year about $1 billion in community projects, or what many call pork spending. Muoio said the goal should always be to maintain a healthy surplus and meet important obligations, such as making pension payments, funding schools, Medicaid spending for the poor, among others. Anything else, “is up to this body,” she said. State Treasury and Office of Legislative Services officials will deliver the same forecast to the Senate Budget and Appropriations Committee on Thursday. Thank you for relying on us to provide the local news you can trust. Please consider supporting NJ.com with a voluntary subscription. NJ Advance Media Staff Writer Brent Johnson contributed to this report. Susan K. Livio may be reached at slivio@njadvancemedia.com. Follow her on X @SusanKLivio. Jelani Gibson may be reached at jgibson@njadvancemedia.com. Follow him on X at @jelanigibson1 and on LinkedIn.