Image: Joseph Roberts
Mel Evans  /  AP
Assembly Speaker Joseph Roberts Jr., said lawmakers planned to spend the night crafting an alternative to the governor's proposal.
updated 7/4/2006 6:45:47 PM ET 2006-07-04T22:45:47

Legislators opposed to Gov. Jon S. Corzine’s proposal to raise the sales tax rejected a compromise sought by the governor Tuesday and began devising their own budget plan, which might involve an income tax increase.

Corzine had hauled lawmakers in to work on the July Fourth holiday, imploring them to end a budget standoff that has shut down many government services, while Atlantic City casinos fought to keep from being dragged into the dispute.

Members of the state Assembly budget panel planned to spend the night crafting a new plan, said Speaker Joseph Roberts Jr.

Tuesday’s special session came three days after Corzine started shutting down state government because lawmakers missed the July 1 constitutional deadline to approve a new budget. Without a budget, the government can’t spend money.

“Make no mistake, people are being hurt and unfortunately more will be hurt in the days ahead,” the governor told the lawmakers.

The state lottery, road construction, motor vehicle offices, vehicle inspection stations and courts already have closed. More than half the state work force — 45,000 people — was ordered to stay home on Monday. Lost lottery ticket sales are costing the state $2.2 million per day, according to the state treasury.

If no deal is reached, state parks and historic sites would be closed Wednesday along with Atlantic City casinos, which are required to have state regulators on duty.

It would be the first time casinos have been forced to close since Resorts opened its doors in 1978 as New Jersey’s first casino-hotel. In the intervening years, they have always managed to keep the doors open, even if it meant shoveling snow, fortifying entrances with sand bags to protect against ocean waves or putting CEOs to work flipping burgers during labor strikes.

Casino operators, whose arguments were rejected by the state Supreme Court in one effort to avoid the budget crunch, lost in a lower court again Tuesday after asking to avoid being shut down as a side effect of the state’s problems. An appeal was planned.

“It’s uncharted territory,” said Joseph Corbo, president of the Casino Association of New Jersey. “We’ll obviously try to control it as best we can under the circumstances.”

Roberts said he asked Corzine to avoid a casino shutdown by declaring state regulators “essential” employees, or by allowing state police to monitor gambling.

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Some gamblers said they didn’t understand why the state would close the casinos during a budget crisis when gambling provides so much in-state revenue — $1.3 million per day, according to the state Casino Control Commission.

“Why close it down when you could just do your job and put the budget together. That’s what they’re paid for,” slots player Jerome Harper, 42, of Philadelphia, said Tuesday of state officials.

The dispute between the governor and his fellow Democrats who control the Legislature centers on his plan to increase the state sales tax from 6 percent to 7 percent to help overcome a $4.5 billion budget deficit for his $31 billion spending plan. The proposal would cost the average New Jersey family $275 per year, according to experts.

Corzine had urged the lawmakers to approve a compromise plan rejected Tuesday. Offered by Senate President Richard J. Codey, it would have used half the $1.1 billion raised by his sales tax increase to ease the state’s property taxes, among the nation’s highest.

Only 15 of 49 Democrats in the state Assembly ended up supporting the compromise, Robert said.

Assemblyman Jeff Van Drew said a new plan may involve a proposal to increase the income tax for those earning at least $200,000 per year. In the past, Corzine has rejected proposals to increase the income tax.

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