New Jersey Goes Back to Work After Corzine Agrees to Tax Raise

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The New York Sun

TRENTON, N.J. — Governor Corzine of New Jersey and legislators agreed to a budget compromise including a sales tax increase to end an impasse that shut down state government for six days and forced Atlantic City casinos to close.

Assembly Democrats had resisted Mr. Corzine’s call to increase the sales tax to 7% from 6% as part of a plan to close a $4.5 billion deficit in a budget of almost $31 billion. Under the compromise, half the new proceeds from the tax will go to the budget and half will go to property tax relief.

“For now, it’s time for New Jersey to get back to work,” Mr. Corzine said at a news conference at the Statehouse in Trenton after ending the impasse that pitted him against fellow Democrats in the Legislature. “We have much more to do in the coming months and years to fix our state’s public finances,” he said.

The agreement still must pass the Assembly and Senate. Mr. Corzine, speaking about 4:30 p.m., estimated it would take 24 to 36 hours to end the shutdown that caused furloughs of 45,000 of 81,000 state employees.

“Once a bill incorporating these principles has passed both houses, we can begin opening all facets of state government and aspects of private business that have been forced to shutter,” Mr. Corzine said.

Mr. Corzine and legislative leaders voiced regrets that the stalemate had caused a government shutdown.

“This absolutely must not happen again,” the governor said. “Our budget process and procedures are flawed and we have to fix them.”

Assembly Speaker Joseph Roberts, who had been Mr. Corzine’s chief antagonist on the budget, said “We owe the people of this state an apology. We have disrupted their lives, we have caused hardship.”

Senate President Richard Codey said lawmakers should observe a self-imposed deadline in the future so it doesn’t happen again. New Jersey’s fiscal year begins July 1.

Mr. Roberts said half of the increase in sales tax proceeds will go into escrow pending a referendum on the November ballot that would enable it to go to property tax relief. Mr. Corzine estimated New Jersey homeowners could get $5 billion to $10 billion in property tax relief over the next five years.

As word of the agreement spread, Assemblyman Gerald Green, a Plainfield Democrat, said officials hoped to get the casinos, which were shut down yesterday, reopened quickly. Gaming was halted because the required state inspectors were unavailable.

“It’ll take a little here and there but I’m hoping that in the next couple of hours the casinos will be back open and we can get people back to work,” Mr. Green said. “That’s the main thing.”

Shares of Trump Entertainment Resorts Inc., which has all three of its casinos in Atlantic City, rebounded from yesterday’s fall, climbing as high as $20.25 before closing at $20.05, up 55 cents, or 2.8% from yesterday’s close in Nasdaq composite trading. The stock fell as low as $18.92 yesterday after the shutting of the casinos.

The governor halted non-essential state services on July 1 because without a budget for the new fiscal year, he has no authority to spend money.

The shutdown affected courts, parks, beaches, campgrounds, racetracks, and the state lottery as well as casinos.


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