Gov. Phil Murphy is set Tuesday to unveil a state budget proposal -- his first -- that will include more than $1.5 billion in new revenue from taxes and closing loopholes, including a small spike in New Jersey's sales tax, NJ Advance Media has learned.

The extra revenue would also come from a proposed millionaires tax, closing tax loopholes used by corporations, and a plan to legalize marijuana, according to multiple sources briefed on the budget.

The sources asked for anonymity because they weren't authorized to speak about the budget.

Murphy, a Democrat, will introduce a $37.4 billion budget -- $2.7 billion higher than this year's $34.7 billion spending plan, according to the sources.

Details of Murphy's inaugural budget began to emerge Tuesday morning, as the governor prepares to detail the plan in a 2 p.m. address.

UPDATE: 10 things to know about Murphy budget's tax increases and spending

SALES TAX

Democrats who control the state Legislature struck a deal with then-Gov. Chris Christie, a Republican, in 2016 to cut the sales tax in exchange for an increase in the state's tax on gasoline to fund an exhausted state Transportation Trust Fund.

The sales tax decreased from 7 percent to 6.875 on Jan. 1, 2017, and to 6.625 this January.

The tax cut was a win for Christie, who wanted a broad-based tax cut to coincide with the higher gas tax. It was a big hit to the state's pocketbook, estimated to cost the state $655 million a year by 2022.

Murphy is expected to bring it back to 7 percent, the level it was before the agreement, according to the sources.

MILLIONAIRES TAX

Murphy is said to be counting on hundreds of millions of dollars in new revenue from a tax hike on millionaires.

Murphy has been a fervent supporter of the millionaires tax, even as legislative leaders in his own party are bailing.

The proposed new tax rate -- 10.75 percent on income over $1 million -- is the backbone of his plan to remake New Jersey and underwrite such campaign promises as boosting funding to schools and making community college tuition free.

His biggest challenge could come not from the Republican lawmakers who say this tax increase will push New Jerseyans to leave the state, but from state Senate President Stephen Sweeney, a powerful Democrat who turned against the millionaires tax and proposed his own 3 percent surcharge on corporations.

Sweeney cooled on the millionaires tax after GOP-led federal tax reform limited taxpayers' state and local tax deductions to $10,000. He said a millionaires tax would be "too much" to pile on the state's wealthiest residents.

But Murphy's position hasn't changed. The governor says his administration needs to kick up some money to fill in the many gaps left by Christie's administration: gaps in school aid, transit funding and in support for safety net social programs.

Middle-class residents have been left behind, Murphy has said, while the wealthy and corporations weren't expected to pay their fair share.

RECREATIONAL MARIJUANA

Details of Murphy's legal marijuana proposal remain unclear. But he has long sought to legalize the drug to raise tax revenue and cut the state's incarceration rate.



The plan has faced opposition from many Democrats in the Legislature. With a recent report by NJ Cannabis Insider showing that it would fail in the state Senate if the vote were taken up today.

Murphy's address is the starting point in the long march to the June 30 deadline when the budget must be signed into law.

It's also the first test for Murphy, whose young administration has so far checked off some easy campaign promises through a series of administrative actions.

Republicans are already criticizing the governor.

State Assembly Minority Leader Jon Bramnick, R-Union, said in a statement Tuesday that Murphy is "taking New Jersey in the wrong direction."

"This is going to force more middle-class New Jerseyans to flee the state," Bramnick said. "Now it is up to the majority in the Legislature to stop this plan. This is deja vu all over again."

The state Senate and Assembly must approve a state budget before Murphy can sign it and can rework the governor's plan. But Murphy has the ability to line-item veto what the Legislature sends him.

State Republican Party Chairman Doug Steinhardt said in a news conference before Murphy's speech Tuesday that the governor's proposals "perpetuate a chronic government misconception that we can tax and spend our way to solvency."

"But we can't," Steinhardt added. "The problem isn't that New Jerseyans aren't taxed enough. The problem is that Trenton spends too much."

NJ Advance Media staff writer Brent Johnson contributed to this report.

Samantha Marcus may be reached at smarcus@njadvancemedia.com. Follow her on Twitter @samanthamarcus. Find NJ.com Politics on Facebook.

Matt Arco may be reached at marco@njadvancemedia.com. Follow him on Twitter @MatthewArco or Facebook.