Governor Phil Murphy’s third shot at a higher tax for New Jersey millionaires tax may be the charm.

The first-term Democrat proposed a record $40.9 billion budget with a tax boost for the rich to help underpin unprecedented spending on New Jersey Transit, pensions and schools.

His odds are far better this year, with Senate President Stephen Sweeney saying he’d consider the levy if the governor would consider an even bigger-than-planned pension payment.

“I thank the Senate President and welcome his willingness to embrace a millionaire’s tax in this budget,” Murphy said Tuesday in remarks prepared for delivery to lawmakers in Trenton. “When we have tax fairness, we can continue our historic investments in our pension systems and in our middle-class families.”

Murphy, 62, a Democrat and retired Goldman Sachs Group Inc. senior director, said his spending plan for the year that starts July 1 strikes a balance of fiscal responsibility and progressive spending.

He is seeking a record $589.5 million for NJ Transit, the ailing commuter bus and rail operator that he has pledged to rebuild. His budget also include an historic $4.6 billion pension payment and would build the state surplus, a step that Murphy calls key to rebuilding New Jersey’s credit rating.

“A stronger surplus, and another payment into the rainy day fund, are important signs to New Jerseyans that we, like them, understand that we can’t rush out and spend everything we have, without regard to future risks,” Murphy said in remarks prepared for delivery. “It sends an unmistakable signal to the credit-rating agencies that we will not follow the irresponsible ways of the past that led to 11-consecutive downgrades.”

Progressive Values

Since Murphy came to office in January 2018, many lawmakers have called his progressive agenda too costly, and twice blocked his proposal to raise taxes on those who earn at least $1 million a year.

Murphy wants to increase the marginal tax rate on every earned dollar over $1 million to 10.75% from 8.97%, for $494 million in annual revenue. That rate currently is on $5 million or more. The change would apply to about 42,000 taxpayers, more than half who live out of state but earn income in New Jersey, according to the governor’s office.

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