TRENTON, N.J. (AP) — New Jersey Gov. Phil Murphy unveiled a $40.9 billion budget for fiscal year 2021 on Tuesday, proposing boosting overall spending by more than 5% compared with the plan he put forward last year and once again raising marginal income tax rates on the wealthy.


This is Murphy's third state budget since he was sworn in in 2018. It calls for higher spending on education, transit and public pensions and would set aside $1.6 billion in surplus, up from $1.2 billion in the current year.


Murphy, a Democrat, cast the budget as a continuation of his campaign pledge to make the state “stronger and fairer," though Republicans attack him for proposing tax increases, which they argue makes the state less affordable. Democrats, who control the Legislature, have also signaled they're unwilling to accept tax increases.


Murphy's proposal must first wind its way through the Legislature, which can change it, before the June 30 deadline. The state constitution requires a balanced budget be in place by the state of the fiscal year July 1.


Few of the changes Murphy is seeking come as a surprise. He wants to increase the public pension payment from $4.1 billion to $4.6 billion, adhering to a schedule to ramp up payments agreed to under Republican Chris Christie.


He's seeking a boost in aid to school of $465 million, or nearly 5% over last year. New Jersey Transit, which saw its subsidy from the state's general fund fall to as low as $33 million under Christie in fiscal year 2016 would be $590 million under Murphy's 2021 proposal. That's an increase of nearly 30% over last year's general fund subsidy.


As he has in the last two budget proposals, Murphy is calling on lawmakers to boost marginal tax rates on incomes over $1 million from 8.97% to 10.75%. The change is estimated to bring in about $500 million to the Treasury. Lawmakers have balked at it. Senate President Steve Sweeney, though, says he would consider the increase if Murphy can find $1 billion more for the state pension.


There are other changes, as well. Murphy is seeking $30 million for a community college grant program that would provide free tuition to about 9,500 students whose families earn $65,000 or less.


He wants $50 million set aside to expand tuition-free college for the first two years at public colleges and universities.


Eighty million dollars would go toward drinking water infrastructure, specifically helping change out lead pipes.


Unlike previous budgets, Murphy is not seeking to raise the sales tax from 6.625% to 7%.


He's seeking what he calls a “corporate responsibility fee” on corporations whose employees are on Medicaid.


The state cigarette tax would go up from $2.70 a pack to $4.35 per pack under his proposal.


The proposal also includes $174 million in savings in state employee health benefits, as well as $392 million in lower spending for state government departments.