Gov. Phil Murphy's line-in-the-sand insistence last year on raising taxes on New Jersey's millionaires turned out to be a humiliating political setback.

But instead of filing away the idea in a folder of political flops, Murphy appears ready to dust it off for another try Tuesday, when he's scheduled to roll out his second budget before a joint session of the Legislature, according to sources familiar with his plans.

Murphy is expected to double down on his call to raise income taxes from the current 8.97 percent to 10.75 percent on those earning $1 million or more, which would bring in an estimated $447 million in revenue for the fiscal year 2020 budget plan.

Murphy's argument, according to sources, is that the money — drawn from a small population of about 20,000 residents — will be a key pillar of a plan that would benefit the broader population by increasing aid for infrastructure, public schools and community college education.

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Murphy on Tuesday will also make the case, they said, that the tax hike will be part of a comprehensive restructuring that will leave the state significantly less dependent on one-time sources of revenue and more reliant on a sustainable source.

Murphy's decision to dig in his heels on raising taxes comes amid a turbulent fiscal environment in New Jersey.

Last year, Murphy, a newcomer to political office, was rebuffed despite his post-election confidence and polls showing wide support for a tax hike.

This year, Senate President Stephen Sweeney, D-Gloucester, Murphy's determined intraparty foe, has also dug in his heels, vowing not to raise taxes until there are steep cuts in spending and consolidation of government services — an imposing political hurdle.

Murphy's second push at a millionaires tax also come at a time when voters are soon to undergo sticker shock from President Donald Trump's federal tax overhaul, which severely curtailed the ability of homeowners to deduct the cost of New Jersey's highest-in-the-nation property taxes from their federal income taxes. Thousands of affluent New Jersey homeowners could be sending a hefty check to the government instead of getting one returned.

That has some Democratic operatives worried that any broad-based state tax hike — even one limited to millionaires — could stir backlash within a handful of competitive swing districts in this fall's Assembly races.

Opposition last year from Sweeney and Assembly Speaker Craig Coughlin, D-Middlesex, forced Murphy to beat a retreat on the millionaires tax, and he settled instead for a much smaller hike on those with incomes of $5 million or more. Murphy also agreed to discard his plan to restore the sales tax to 7 percent.

For many observers, it it was Murphy's baptism-by-fire moment, a humbling lesson in the Trenton trench warfare where his optimistic public messaging has no bearing on the behind-the-scenes bargaining.

One-shot funding "gimmicks" — such as the sale of assets — has long been a source of complaint from Wall Street bonding agencies, which repeatedly hit former Gov. Chris Christie with credit downgrades.

Murphy hinted at his plans in a speech in Washington, D.C., on Thursday at the New Jersey Chamber of Commerce's annual "Walk to Washington" dinner. Although he didn't mention plans to raise the millionaires tax, he used the phrase "tax fairness,'' which in Murphy-speak is code for the tax hike.

"I will speak once again to my commitment to tax fairness for our middle-class families and seniors – and I mention, once again, the countless middle-class taxpayers who are wondering where their promised federal tax cut went,'' Murphy said.

The speech will kick off a four-month set of hearings and negotiations between Murphy and the Democratic-controlled Legislature on the budget, which must be passed and signed into law before the new fiscal year starts on July 1.

Sweeney will be the a major obstacle in Murphy's efforts.

A onetime champion of taxing millionaires, Sweeney switched to fierce opponent in late 2017 as Trump's federal tax overhaul was nearing passage in Congress. Sweeney argued that it was not the time to start pinching the state's wealthiest residents with a tax hike, especially since they were about to lose the ability to write off property taxes.

Sweeney feared it would trigger an exodus of the state's wealthiest to low-tax states — which the state could not afford. More than 60 percent of the state's gross income tax, the lifeblood of state aid to school districts and municipalities, is reaped from the state's wealthiest earners.

Since then, Sweeney has advanced his "Path to Progress,'' a blueprint for systemic cost cutting, that calls for a restructuring in public employee health and pension benefits. The proposal is also his political marker — he has made it clear that there will be no progress on tax hikes unless his plan is enacted.

Yet Murphy's hand may be strengthened by necessity. New Jersey is on track to be short on tax revenues, according to an Office of Legislative Services report.

Confronted with the choice of making steep cuts in programs to make up the shortfall, lawmakers will choose the lesser-of-two-evils option of raising taxes on millionaires. That choice is also made easier by polls that showed strong public support for the hike. A Rutgers University/Eagleton Institute poll last year said that despite feeling overburdened with taxes, nearly two-thirds of the public support raising taxes on millionaires.

"Residents always want to make sure that taxes aren't hitting them directly,'' said Ashley Koenig, the poll director. "So anything like the corporate loopholes that we polled on or the millionaires tax or things that the average New Jerseyan doesn't think will affect them, they are going to be much more supportive of that."

But some Democratic operatives say broad-based polling results don't offer an accurate picture of the political risks of a millionaires tax among upper-middle-class voters in swing districts who have been hammered by Trump's cap on state and local tax deductions

While they wouldn't be affected by a millionaires tax, voters could be lured by Republican campaign attacks that Democrats led by Murphy are determined to come after them next. It would also force Democrats into a defensive position.

Republicans, who have been reduced to a rump party in the Legislature, have made it clear that they intend to cast Democrats as eager to embrace taxes to feed their voracious appetite for spending.

"I’m worried that they are going to continue this rapid increase in spending — 8 percent last year,'' said Assemblyman John DiMaio, R-Hunterdon, ranking Republican on the Assembly budget committee. "If they go anywhere near that, it’s going to mean more people are going to get taxed and they’ll reach lower on the tax scale, and its going to affect the middle-class taxpayer."