TRENTON, N.J. — New Jersey Gov. Phil Murphy is set to propose his third budget on Tuesday, setting up a possible repeat showdown with lawmakers over his so-far unsuccessful attempts to raise income taxes on the wealthy.

The current fiscal year's $38.7 billion budget expires on June 30, and Murphy and the Legislature have a constitutional mandate to enact a balanced budget by the deadline.

Despite Democratic control of the governorship and the Legislature, lawmakers have balked at Murphy's proposals the past two years to hike marginal tax rates on incomes over $1 million from 8.97% to 10.75%.

Though they've disagreed on taxes, Murphy and lawmakers have boosted spending on aid to schools, public pensions and transit, among other areas. Last year's proposal had a roughly 3% increase in spending, while Murphy's first proposal since taking over from Republican Chris Christie was about a 5% boost.

A look at how the budget is shaping up:


That's still unclear.

Lawmakers have had little appetite for raising taxes since Murphy became governor, despite voting repeatedly to do just that when Christie was governor.

Murphy has called for higher rates on the wealthy, so the state can meet its obligations to public pensioners — the state had skipped pension payments for years under Democrats and Republicans before getting back on track under Christie. Murphy wants to continue pouring money into the pensions until the state payments meet the level actuaries have calculated would keep it afloat. The current year's pension payment was nearly $4 billion, or an 18.5% increase from the year before.

In addition, in his State of the State address last month, he said: “I am not giving up the fight for a millionaires tax.”

Murphy also wants to increase school funding and the state subsidy for beleaguered New Jersey Transit, which continues to be beset by commuter complaints.

Murphy's office said in a statement that he will continue “pushing for tax fairness ... and putting New Jersey on the path to long-term fiscal responsibility.”



The precise mix changes from year to year but tends to follow a pattern. Most of the revenue to the state treasury comes from income taxes, which according to the constitution must be used to help reduce property taxes.

New Jersey has among the highest property taxes in the country. They're levied by local and county governments and school boards. So the lion's share of the state budget goes to aid to school districts.

Less than a third of the budget goes to purchase services, like health care coverage, for low-income residents.

The next biggest chunk goes to debt service, with the remainder going to cover the cost of state government.



Not exactly.

Republicans, who are in the minority in state government and are beginning to launch campaigns against Murphy for the 2021 election, say he's failed to make the state more affordable.

Progressive groups have been the governor's staunchest allies in fights with lawmakers over previous budgets, but this year a coalition of them has banded together to call for about $3 billion in new revenue, or higher taxes.

They want to add levels into the income tax rates particularly on the wealthy, along with raising the sales tax to 7%, up from 6.625%, the rate it reached after a 2016 deal between Christie and lawmakers that boosted gas taxes while lowering other rates.