Gov. Phil Murphy on Tuesday pitched a state budget compromise to fellow Democrats who control the state Legislature that would raise New Jersey's sales, income and business taxes.

A letter from Murphy to lawmakers circulated Tuesday afternoon outlines the latest volley in heated budget negotiations leading up to the deadline Saturday. It remains undetermined whether the stalemate ends in a compromise, government shutdown or $855 million in spending cuts.

Murphy says in the letter he's unwilling the accept the budget the Legislature passed last week. He has said that budget, which raises the Corporation Business Tax on the state's largest businesses to the highest level in the U.S., would leave the budget with a $104 million deficit and no emergency reserves.

"I remain ... unable to certify that the revenues contained in this budget are sufficient to fund the programs we all support. Failure to provide sufficient funding places all of these programs at risk," Murphy wrote.

"It is not too late for us to bridge this shortfall," he continued.

In rejecting the Legislature's budget, Murphy offered to merge his own spending plan and the Legislature's to include a more modest increase in the Corporation Business Tax, a smaller increase on personal income over $1 million and a two-year phase in of a sales tax hike.

NJ Advance Media reported last week that the Democrats discussed similar concessions, but ultimately talks broke down again and the Legislature passed its own budget.

Murphy says this counteroffer represents "a significant compromise" from his budget proposal.

"I believe this compromise fairly balanced our mutual concerns while strengthening our fiscal foundation," he said.

That original spending blueprint introduced in March would restore the sales tax from 6.625 to 7 percent and raise the 8.97 percent marginal tax rate on gross income over $1 million to 10.75 percent.

State Senate President Stephen Sweeney, D-Gloucester, and state Assembly Speaker Craig Coughlin, D-Middlesex, rejected that plan, offering instead to hike taxes on corporations.

That proposal creates two new tiers for businesses, levying 11.5 percent on businesses with net income between $1 million and $25 million and then 13 percent on businesses with net income over $25 million.

At 13 percent, New Jersey's Corporation Business Tax would rank highest in the country.

Murphy says any movement in this tax "must be at a rate that does not make New Jersey an outlier nationally, as the bill that is on my desk currently would." It also must extend beyond the two years proposed by the Legislature, he said.

As part of that deal, Murphy said he would agree to double funding for Homestead property tax credits and sign landmark school funding reform pushed by Sweeney.

Legislative leaders met privately with Murphy for about an hour Tuesday afternoon, leaving without comment.

Sweeney and Coughlin released a joint statement Tuesday evening, saying they will consider Murphy's counteroffer, along with some "other options" of their own.

"We submitted a fiscally responsible budget that meets the state's priorities, makes the investments needed to move the state forward and protects the interests of New Jersey's taxpayers," Sweeney and Coughlin said. "We are reviewing the proposal presented by Governor Murphy at today's meeting with legislative leaders and we will give his offer full consideration, along with other options we are evaluating."

NJ Advance Media staff writers Matt Arco and Brent Johnson contributed to this report.

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