For the second year in row, Gov. Phil Murphy lost his bid to boost taxes on millionaires, the centerpiece of his pledge to reshape New Jersey's finances.

But seen through the prism of political strategy, Murphy actually ends up walking away from the tax fight battle with a valuable prize: the ability to paint inside-the-dome Democrats as pawns of power brokers who protect the rich over the needs of the middle class.

It's a class warfare cudgel that Murphy can use to build his brand. Seen that way, Murphy wins by losing.

"He gets to rail on a popular issue,'' said Ben Dworkin, director of the Institute for Public Policy and Citizenship at Rowan University, noting that polls show 70 percent public approval for a millionaires tax hike.

Yet what makes for good politics for Phil Murphy also portends political paralysis possibly for years to come.

Murphy's millionaires tax defeat underscores a troubling scenario for residents, taxpayers and Trenton Democrats. After they seized dominant control of the Legislature and the governor's office, the Democrats are facing a long civil war in Trenton.

And that means the forecast for fixing New Jersey's creaky, delay-plagued mass transit system, boosting property tax relief and reining in the state's mounting debt obligations is a prolonged stalemate. Legalized marijuana, a central campaign promise from Murphy, is also on hold, another victim of this Democratic infighting.

Powerful Democratic leaders — Senate President Stephen Sweeney, D-Gloucester, and Assembly Speaker Craig Coughlin, D-Middlesex — have made it clear that they will block Murphy's agenda with a blink of an eye when it suits them. They can easily mobilize enough lawmakers to override any Murphy veto and refuse to allow any of the governor's priorities to get even a public hearing, let alone a vote.

And Murphy, who lacks the votes in the Legislature to counter them, plans to make his case directly to the public, crusading as a man-of-the-middle-class reformer and turning what should have been useful Democratic partners in the Legislature into useful political foils.

"We're on a crusade," Murphy crowed Sunday during a budget-signing ceremony that looked more like an election-night rally before hundreds of activists and supporters.

"This is the model for how New Jersey moves forward," Murphy said after signing a budget that did not include the millionaires tax. "But I am not naive. Everyone here knows the old ways haven’t been put behind us yet. While progressive change is taking hold all across our country, Trenton largely remains a holdout. Have no doubt: Change is coming to Trenton, and I invite all those willing to join us. But for those stuck in the failed ways of the past — we’re moving forward."

Sweeney dismissed suggestions that Democrats will be defined by intra-party gridlock, and noted that lawmakers delivered a budget to Murphy 10 days before the July 1 deadline — a rare feat in the era of budget brinkmanship in Trenton.

And regardless of the failure to win votes for a millionaires tax, the final budget contains most of Murphy's priorities for schools, transit and taxpayer relief — a point Murphy himself has noted.

Yet Sweeney was still simmering over Murphy's populist attacks — "Whose side are you on?" the governor said last week — and barbs from a Murphy-aligned political advocacy group, New Direction New Jersey. The secretive "dark-money group" distributed emails accusing Democrats of passing a "scam budget" that "screws taxpayers."

Sweeney and others found Murphy's rhetoric out of bounds and opportunistic. Murphy, the former Goldman Sachs executive, built a second career as a fundraiser for Barack Obama and Hillary Clinton, pillars of the political establishment. Now, he suddenly has joined the bomb-throwing Bernie Sanders wing of the party.

"It really comes down to the governor. We’re willing to work with him and negotiate with him. But this isn’t Goldman Sachs,'' Sweeney said last Thursday. "And you don’t order people to do things. We work together, and when we work together, we get things done."

But Murphy continued to dig in his heels last week and warned that he intends to push ahead with "tax fairness" — the millionaires tax and other fees that legislators stripped from the budget.

He suggested that he will keep up the pressure even as Democrats campaign this fall to maintain their veto-proof majorities in the Assembly. Murphy's advocacy will be a political godsend to Republicans eager to portray Democrats as tax-and-spend liberals.

"I say this humbly — I am standing here today because of that desire for change. I was elected because I offered a different vision for New Jersey. And because I don’t owe the insiders anything," Murphy said in his budget statement Sunday. "So I’m in the fight for the long haul — it doesn’t end today or next week or next month."

But so far, Murphy's megaphone has been met with deaf ears in the Statehouse. The millionaires tax has been his signature issue since his 2017 campaign, but he's yet to convert it into actual political support from legislators who must vote on it to make the tax increase a reality. Murphy has infuriated Sweeney and George E. Norcross III, Sweeney's political benefactor who presides over a South Jersey political machine that dominates state politics.

More:Murphy signs budget, narrowly avoiding a government shutdown

More:Murphy announces improvements to NJ Transit for commuters

NJ tax break fight

Still, Murphy's leftward lurch appears to have solidified his standing with party activists — public employee unions, social justice advocates and a constellation of grassroots groups that emerged after Trump's victory in 2016.

Those groups help mobilize the Democratic victories in the congressional midterms and are now turning their attention — with the help of Murphy aides — on the boss system that controls the Trenton agenda. They have rallied behind Murphy, especially his overhaul of the state's corporate tax incentive program.

Murphy's focus on corporate tax breaks, born out of a state audit and a damning state comptroller's report earlier this year, has put a harsh spotlight on the Economic Development Agency, particularly on entities and companies tied to Norcross that were granted generous breaks.

Those companies received $1.1 billion of the total $1.6 billion the authority awarded in Camden since 2013, the year the incentives were overhauled to spur investment in economically depressed areas and keep companies from moving out of state.

A state grand jury is investigating the issue. Norcross is suing Murphy over what he perceives as a targeted attack on him and his reputation as an advocate for South Jersey.

Although Murphy has failed to deliver on the millionaires tax, activists largely remain in his corner, glad that New Jersey finally has a governor who is willing to challenge Norcross' power instead of capitulating to it. And they see a governor who is finally finding his footing after 18 months.

Last year, Murphy assumed he was riding high off a voter mandate from his 13-point election victory, but he was eventually thumped by the entrenched foes in Trenton.

But the deer-in-the-headlights governor of 2018 is now a governor with a defined persona and message. Murphy has succeeded, at least for now, in depicting a Legislature corrupted by crony capitalism.

"I think the governor gets to make a decision ... about whether or not he wants to get along or whether or not put forth his agenda and what he thinks," said Hetty Rosenstein, director of the Communications Workers of America, the state's largest government workers' union and a close Murphy ally. "And I think he made a decision that he is attached to his convictions."

That may be a rally cry for his base, and maybe for his own 2021 reelection prospects, but Sweeney and even Coughlin, who was seen as a somewhat independent tactician, have asserted their power.

Sweeney, who is still nursing a grudge from Murphy's refusal to help during Sweeney's 2017 reelection battle, has set down his own marker. And it is this: no tax hikes for millionaires or anybody else unless Murphy first agrees to cuts in government services, including rollbacks in public worker benefits. Murphy has made it clear that he has no interest in targeting public workers for cost savings.

"Is America capable of doing the big things anymore? I certainly hope so," Murphy said last week. "But I know that in New Jersey, we can't do the big things that are necessary to prepare for our future and that of our children if we continue to think small."

He also can't do much of anything without votes. And, for now, those remain in Sweeney and Coughlin's control.