With only 27 days to go before a balanced state budget must be adopted to avoid a government shutdown, New Jersey Gov. Phil Murphy and State Senate President Steve Sweeney are involved in a stare-down — and neither one has blinked so far.

On Monday, the governor held what amounted to a pep rally in Bergen County with the mayors of Hackensack, Fort Lee and Teaneck, as well as state Treasurer Liz Muoio, for his proposal to increase taxes on New Jersey residents making at least $1 million a year, from 8.97% to 10.75%.

He said doing this would raise enough money to allow the state to offer 2 million state residents “much needed additional property tax relief” in the form of a one-time $125 refundable tax credit.

When Murphy was asked about State Senator Steve Sweeney’s refusal to discuss a millionaire’s tax hike as part of the budget plan, the governor said he’s a born optimist — however it’s unclear what will happen.

“I don’t know. I mean I left him a message on Friday, and said I approach this in a spirit of goodwill, that this is the right thing to do for our middle class," Murphy said.

State Senate President Steve Sweeney, D-Gloucester, who’s been pushing his "Path to Progress" plan that calls for significant structural changes to state government spending, said like the governor, “I’m always an optimist, but I’m a realist too, and until we fix problems, raising taxes is not the solution.”

"Let’s be optimistic. Let’s see what we can do to fix things, but if the only way we’re going to have a budget is with a millionaires' tax, well then we’re going to have a problem," Sweeney said. "I’m not doing a millionaires' tax without fixing what’s wrong here.”

Murphy said his office is in "conversations across the board, we deal with the Legislature morning, noon and night.”

When Sweeney was asked about this, he said the governor may be talking to other legislators morning, noon and night, but he’s only heard from Murphy’s office once in recent weeks about getting together to discuss the budget.

When the governor was asked specifically about the possibility about a government shutdown on July 1, he again encouraged optimism.

"This is the quintessential middle-class state, one of America’s greatest if not greatest states," he said. "We’ve put forward a budget which is all in on the middle class. I’m an optimist and we’ll see where this takes us.”

Sweeney stressed the first step that needs to be taken is addressing the state’s massive debt that continues to build up rapidly, not increasing taxes.

“Hopefully at some point he’ll (Murphy) talk to us about at least what I’ve been talking about, which is trying to fix things," Sweeney said.

Sweeney argues his Path to Progress report shows New Jersey could save roughly $3 billion by reforming the state’s healthcare system, while still providing outstanding healthcare for teachers and public sector workers.

“You can tax people but the more they leave the more money we lose, so we need to fix things now and then we can have a conversation about taxes later," he said.

State Senator Declan O’Scanlon, R- Monmouth, agrees with Sweeney that fundamental spending issues need to be addressed instead of raising taxes.

“The governor at first said we needed this tax increase to balance our budget. Now we know we don’t need it to balance our budget because our revenues have exceeded our expectations," Scanlon said. "What we need to do is get our spending under control, to sit down and work together to implement health pension reforms. Anyone who’s paying attention to policy in New Jersey knows this needs to happen.”

You can contact reporter David Matthau at David.Matthau@townsquaremedia.com

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