About two million people who file taxes in New Jersey would receive a $125 refundable credit on their income taxes next year if lawmakers agree to raising taxes on the state’s millionaires, Gov. Phil Murphy announced Monday as tense state budget negotiations continue to heat up.

Murphy unveiled the details as he tries to convince his fellow Democrats who lead the state Legislature to drop their opposition to a millionaires tax to help pay for government services like transportation, education, and public-worker pensions.

The two have less than a month to come to an agreement before a state budget must be enacted July 1. If not, Murphy could order a state government shutdown until a deal is reached.

Murphy sweetened the pot last month when he announced an unexpected surge in tax collections would allow the state government to deliver $250 million more in direct property tax relief to Garden State residents if he gets the millionaires tax. New Jersey has the highest property taxes in the nation.

On Monday, Murphy revealed that would come in the form of a one-time $125 credit on 2019 gross income tax returns.

“Our middle class deserves tax fairness,” Murphy said during a news conference at city hall in Hackensack. “They need direct property tax relief, more than ever. And the millionaires tax is the way to truly deliver for them.”

Taxpayers — including both homeowners and renters — who earn $10,000 to $250,000 a year in gross income would qualify, Murphy said.

That means about two million — or 46 percent — of the people who file taxes in the state are eligible, his administration said. That includes some non-residents who work and pay income taxes here.

The $125 credit is a sliver of the average New Jersey property tax bill of $8,767.

But Murphy stressed that money is available only if lawmakers approve the millionaires tax, which would increase the tax rate on those who earn more than $1 million a year.

Murphy said it’s “time to stop treating the budget as a crisis management fire drill and to create a sustainable and fair budget that works for families across New Jersey.”

That, he said, including finding "the courage to ask the wealthiest among us to pay their fair share.”

“It really becomes a simple question: Who’s side are you on?" the governor asked. "Are you on the side of two million-plus New Jersey households who are taking it on the chin under President (Donald) Trump’s tax plan? Or are you on the side of the fewer than 19,000 millionaires who are making out just fine?”

A millionaires tax would affect about 18,000 in-state residents and 19,000 out-of-state residents and pour about $536 million into the state budget.

Still, both state Senate President Stephen Sweeney, D-Gloucester, and state Assembly Speaker Craig Coughlin, D-Middlesex, have been steadfastly against the millionaires tax. They argue the state is already over-taxed and that significant government spending cuts are the first line of defense.

Coughlin’s office doubled down on the speaker’s opposition Monday, saying he “does not believe” they need a millionaires tax to balance the budget.

“Speaker Coughlin looks forward to continuing discussions with the Governor and Senate President to ensure government, at all levels, runs as efficiently and effectively as possible, advance fiscally responsible legislation and craft a state budget,” Coughlin spokeswoman Liza Acevedo said. “Speaker Coughlin encourages Governor Murphy to keep an open mind regarding signing a fiscally sound budget, excluding a millionaires tax.”

Last week, Sweeney said lawmakers intend to pass a budget by July 1, but it’s unclear if Murphy will sign it. The governor has hinted in recent weeks he won’t do so without the millionaires tax.

“If it’s about a millionaires tax and he’s going to shut the government down to raise taxes, that’s on him," Sweeney said.

Murphy said Monday that he left Sweeney a message Friday that a millionaires tax is “the right thing to do or our middle class and those who dream to look up and one day get there."

“I was born an optimist,” Murphy said. “I remain so. We’ll see how it plays out over the next few weeks.”

A Republican lawmaker, state Sen. Declan O’Scanlon, called Murphy’s announcement Monday “a bribe to taxpayers to accept bad policy.”

“The policy of incessant tax increases being advocated by the governor in lieu of working with us to reform our current spending so we can fix New Jersey is lousy policy, no matter where the money is going,” O’Scanlon, R-Monmouth, said. “Where the money is going is irrelevant.”

NJ Advance Media staff writer Samantha Marcus contributed to this report.

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

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