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Budget stalemate closing down Jersey

Amy Scott Jul 3, 2006

TESS VIGELAND: New Jersey drivers were out of luck today if they wanted a new license. Same for would-be lottery players. All non-essential state services shut down today. A weekend deadline passed with no budget. New Jersey Gov. Jon Corzine is battling fellow Democrats over how to resolve a $4.5 billion spending gap. Corzine has called for a special session of the state legislature tomorrow. Marketplace’s Amy Scott reports lawmakers may be rolling snake eyes with one of the state’s biggest industries.

AMY SCOTT: Regulators have ordered Atlantic City’s casinos to shut down by Wednesday morning. They cannot legally operate without a state monitor on site. Between gambling and the lottery the state stands to lose as much as $3 million a day in revenue. But a shutdown could have longer-term effects.

Casino operators like Harrah’s and Trump have been pouring billions of dollars into revitalizing Atlantic City. Gaming industry analyst Lawrence Klatzkin says the casinos may reconsider.

LAWRENCE KLATZKIN: If they really get a disruption where they have to close down for a few days, and it costs them millions of dollars, is Harrah’s still gonna wanna spend a half a billion, or is MGM gonna say “Yeah, let’s spend $3 billion in Atlantic City?” These companies will have to rethink some of their investments.

If casinos shut down, workers could lose wages and related businesses could lose customers. It’s not clear yet whether New Jersey’s 45,000 state workers will be paid.

James Hughes is dean of the Bloustein School of Planning and Public Policy at Rutgers. He says a shutdown isn’t great for the state economy. But neither is a multibillion-dollar budget deficit.

JAMES HUGHES: That fiscal instability is something corporate America doesn’t like. And our job growth pattern for the past four years has not been very good. So a precondition for regaining high-end job growth will be a restoration of fiscal sanity within the state.

State Democrats are fighting the governor’s proposal to raise the state sales tax by one percentage point. Hughes says last time a Democratic governor increased the sales tax, the party lost control of the state legislature in the next election.

In New York, I’m Amy Scott for Marketplace.

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