New Jersey lawmakers have advanced a $36.2 billion budget that includes boosted school aid and a hike in the state's business tax rate

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TRENTON, N.J. (AP) — New Jersey lawmakers advanced a $36.5 billion budget on Tuesday that includes boosted school aid and a hike in the state’s business tax rate.

The Assembly and Senate budget committees approved the measures, the same day Democratic Gov. Phil Murphy warned he would veto any measure that includes the revenues he views as unsustainable and gimmicky. He also has voiced his reluctance to approve the business tax hike, which if approved, would give the state the highest rate in the country.

The lawmakers’ budget comes as a June 30 deadline for a balanced budget approaches and as Murphy ramps up pressure on legislators to accept his $37.4 billion spending plan.

The biggest differences come down to how lawmakers and Murphy want to pay for state spending. Murphy has proposed roughly $1.6 billion in new taxes, including a hike in the sales tax from 6.625 percent to 7 percent and an increase in income taxes from 8.97 percent to 10.75 percent on people earning more than $1 million.

Lawmakers instead are proposing an increase in the corporate business tax, raising the rate from 9 percent to 11.5 percent on business income from $1 million to $25 million and boosting the rate above $25 million to 13 percent.

The package would sunset in two years, but would mean New Jersey would have the highest business tax rate in the country, outstripping Iowa at 12 percent.

That would bring in more than $800 million in revenues, which lawmakers are proposing to supplement with savings that they penciled in from audits and a tax amnesty — two methods that Murphy has called gimmicks.

“I refuse to be boxed into this false notion that some have that we should just be content to look at budgets one at a time and go to fiscal year by the seat of our pants,” Murphy said at a news conference at Trenton’s train station.

Business groups protested the tax hike and pleaded with lawmakers not to approve it.

“Please, please don’t do it,” said Tom Bracken, the president of the state Chamber of Commerce.

Senate Budget Committee Chairman Paul Sarlo emphasized that the tax hike expires.

“We are being smart about how we raise taxes and by how much,” he said in a statement. “New revenue consists primarily from a two-year Corporation Business Tax surcharge on large corporations that are experiencing windfall profits from the federal tax laws.”

The disagreements among Democrats have ramped up in recent days, with Senate President Steve Sweeney and Assembly Speaker Craig Coughlin appearing this week at a joint news conference to unveil their own budget, and Sweeney saying lawmakers wouldn’t be bullied.

There’s substantial agreement over spending.

Murphy and lawmakers both want to boost spending on K-12 education, New Jersey Transit and the public pension. Among the changes lawmakers are proposing on spending is an additional $65 million on school aid. Murphy has signaled he would accept the change.

But the entire budget seems in doubt over the disagreement on funding.

Murphy on Tuesday renewed a veto threat he first made on Monday that centers on his call for more revenues to support spending.

Republicans are in the minority and have little leverage.

Assembly Minority Leader Jon Bramnick called on Murphy and Democrats to overhaul the state’s public health benefits program, but Murphy and Democrats have not focused on the issue.

Lawmakers say they expect to hold final votes on the spending plan later this week.