Gov. Phil Murphy on Tuesday will propose raising taxes on cigarette sales in New Jersey by $1.65 a pack as part of his third state budget plan — which would tie the Garden State for the highest such tax among U.S. states.

If approved by state lawmakers, the increase in the cigarette tax would be New Jersey’s first in 11 years, funneling about $218 million more into state government coffers, three legislative sources familiar with the proposal confirmed to NJ Advance Media.

The sources spoke on the condition of anonymity because they are not authorized to discuss the proposal.

The New York Times on Tuesday morning was the first to report on Murphy’s proposed increase, noting that it comes as many states and the federal government are trying to curb nicotine sales.

New Jersey’s cigarette tax is now $2.70 a pack, the 10th highest among the states. Murphy’s plan would increase it to $4.35 a pack, putting it on par with New York and Connecticut.

Only Washington, D.C. — at $4.50 — would have a higher cigarette tax, according to the Tax Foundation. It’s also $4.50 a pack in Chicago and New York City, which is allowed to add a tax on top of the state tax. Pennsylvania’s tax is $2.60 a pack.

About 13 percent of New Jersey adults smoked cigarettes in 2018 — a drop from 17 percent in 2011, according to statistics from the state health department. Nationally, about 13.7 percent of adults smoked in 2018, according to the federal Centers for Disease Control and Prevention.

Murphy is scheduled to unveil his budget blueprint at 2 p.m. at the Statehouse in Trenton.

The Democratic-controlled state Legislature would have to agree to any tax increase before Murphy, a Democrat, could sign the budget into law.

Meanwhile, sources confirmed that, as expected, Murphy’s third budget plan also includes a millionaires tax, which the governor predicts would bring in about $500 million in the fiscal year that begins July 1.

Murphy, an avowed progressive, has called for a millionaires tax — or, more specifically, a higher tax rate on those with income over $1 million — since taking office in January 2018. The goal, Murphy says, is to provide more funding for education, transportation, and public-worker pensions.

But in each of the last two years, top Democratic lawmakers have been opposed.

This time may be different. State Senate President Stephen Sweeney, D-Gloucester, told NJ Advance Media this past weekend he would consider supporting the tax hike in exchange for an extra $1 billion payment to the state’s public-worker pension fund. That would likely require large spending cuts elsewhere in the budget.

It’s unclear whether Murphy would agree to the deal. He said during his call-in television show Monday night that he was “very encouraged” by Sweeney’s comments, noting that polling shows the millionaires tax is popular with New Jersey voters.

“I feel like we’re finally seeing that groundswell inside the chamber we’ve seen in the streets,” Murphy said during his show on News 12 New Jersey.

The governor revealed Monday his budget will include a record payment to the pension system for the third straight year. Bloomberg News reported Tuesday morning that Murphy’s budget proposes including $4.6 billion to the pension fund.

“Am I open to finding more ways to plus that up even further that works for our budget, works for state workers, and works for taxpayers? You betcha,” Murphy said.

NJ Advance Media reported Tuesday morning that Murphy also plans to cut the cost of public employees’ health care in the state by $174 million as part of his new budget.

Still, state Assembly Speaker Craig Coughlin, D-Middlesex, also negotiates the budget with Murphy. And on Monday, Coughlin signaled he (once again) isn’t keen on tax hikes.

“I’m always encouraged by a spirit of cooperation between the Governor’s office and the Legislature," he said in a statement. "However, I remain cautious of increasing any broad-based taxes on an already overburdened state.”

Murphy’s budget does not include plans to revert the state’s sales tax from 6.62 percent to 7 percent, the sources confirmed.

Politico New Jersey on Tuesday morning was the first to report that the governor won’t propose such a hike — as he unsuccessfully did in his first year — though he still believes the 2016 deal to decrease the sales tax was a gimmick.

Brent Johnson may be reached at bjohnson@njadvancemedia.com. Follow him on Twitter @johnsb01.

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