New Jersey, Maine Shut Down Government Amid Budget Impasses

By Kate King Features Dow Jones Newswires

Governors in New Jersey and Maine shut down state government after lawmakers in their states failed to reach budget deals before Friday's midnight deadline.

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Republican New Jersey Gov. Chris Christie, who is in his final year of two terms running the state, called the Democratic-led legislature back to Trenton for a special session on Saturday. In Maine, Republican Gov. Paul LePage put in place a partial shut down until Monday afternoon.

"This was completely avoidable," Mr. Christie said in a statement.

Under the New Jersey shutdown, only essential state employees such as state police, prison workers, and hospital employees will report to work, according to a statement from the governor's office. The lottery, casinos and racetracks will remain open and road construction work will also continue.

State beaches and parks would close, including Liberty State Park, which overlooks New York City and is scheduled to host more than 100,000 people for its annual Fourth of July celebration and fireworks display on Tuesday.

The states are among 46 that start a new fiscal year on Saturday and nearly a dozen where budget negotiations had come down to the wire. Some states routinely wait until the 11th hour or later to agree on a budget, and several missed the deadline this year including Connecticut.

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Other states locked in debate include Illinois, which hasn't had a budget in two years and has faced a risk of a ratings downgrade to junk status. Officials there took a promising step forward to resolve the standoff on Friday, with the House of Representatives voting to support a Democratic spending plan largely viewed as a compromise measure. It wasn't immediately clear if the ratings firms would allow more time to work on a resolution.

In Maine, Gov. LePage ordered the state's first shutdown since 1991, after lawmakers failed to strike a deal on new taxes and education funding.

"The Maine people are taxed enough," Gov. LePage said in a statement. "I will not tax them anymore and in my budget overall taxes were decreased. Maine has plenty of revenue to fund state government without raising taxes."

Essential services in the state remain in place as will a host of others including some state parks, unemployment benefits and child welfare.

Connecticut Gov. Dannel Malloy, a Democrat, on Friday signed an executive order to keep the state government running after the Legislature failed to approve a budget plan to close a two-year deficit of $5.1 billion.

Mr. Malloy's executive order, which went into effect at midnight, triggered deep spending cuts for the state and would amount to a $2.1 billion reduction for the entire fiscal year. The plan slashes education funding, eliminates summer youth-employment programs and cuts rental-assistance programs.

In New Jersey, cities and businesses braced for disruptions over the holiday weekend.

"There's an economic impact for real," Jersey City Mayor Steve Fulop said Friday before the shutdown, adding that the city and local businesses have invested hundreds of thousands of dollars in the event.

Statue Cruises, which runs ferry trips to Ellis Island and the Statue of Liberty from Liberty State Park, said it would honor tickets at its Manhattan location or exchange them for later dates.

A four-day shutdown would impact more than 25,000 expected visitors and cost at least $850,000 in lost revenue to the company and related entities, a Statue Cruises executive said in a statement.

Mr. Christie said he would sign the budget sent to him by Democrats, which includes more than $300 million in additional spending for education and other services, but only if lawmakers passed a bill giving the state more control over its largest insurer. The insurer, Horizon Blue Cross Blue Shield of New Jersey, has strongly opposed the legislation.

Assembly Speaker Vincent Prieto, a Democrat, has refused to put the legislation demanded by Mr. Christie up for a vote, calling it an unfair intervention in the not-for-profit company that shouldn't be part of the budget process.

Kate Linebaugh contributed to this article.

Write to Kate King at Kate.King@wsj.com

Governors in New Jersey and Maine shut down state government after lawmakers in their states failed to reach budget deals before Friday's midnight deadline.

Republican New Jersey Gov. Chris Christie, who is in his final year of two terms running the state, called the Democratic-led legislature back to Trenton for a special session on Saturday. In Maine, Republican Gov. Paul LePage put in place a partial shutdown until Monday afternoon.

"This is embarrassing and it's pointless," Mr. Christie said at a Saturday news conference in Trenton. "Our residents do not have access to a myriad of services that they deserve."

Under the New Jersey shutdown, only essential state employees such as state police, prison workers, and hospital employees will report to work, according to a statement from the governor's office. The lottery, casinos and racetracks will remain open and road construction work will also continue.

Mr. Christie said federal funding would pay for some essential services during the government shutdown, and for others, "we'll run up a tab. I can't stop the state police from operating."

State beaches and parks were closed, including Liberty State Park, which overlooks New York City and is scheduled to host more than 100,000 people for its annual Fourth of July celebration and fireworks display on Tuesday. Island Beach State Park in Ocean County was also closed Saturday.

The states are among 46 that start a new fiscal year on Saturday and nearly a dozen where budget negotiations had come down to the wire. Some states routinely wait until the 11th hour or later to agree on a budget, and several missed the deadline this year including Connecticut.

Other states locked in debate include Illinois, which hasn't had a budget in two years and has faced a risk of a ratings downgrade to junk status. Officials there took a promising step forward to resolve the standoff on Friday, with the House of Representatives voting to support a Democratic spending plan largely viewed as a compromise measure. It wasn't immediately clear if the ratings firms would allow more time to work on a resolution.

In Maine, Gov. LePage ordered the state's first shutdown since 1991, after lawmakers failed to strike a deal on new taxes and education funding.

"The Maine people are taxed enough," Gov. LePage said in a statement. "I will not tax them anymore and in my budget overall taxes were decreased. Maine has plenty of revenue to fund state government without raising taxes."

Essential services in the state remain in place as will a host of others including some state parks, unemployment benefits and child welfare.

Connecticut Gov. Dannel Malloy, a Democrat, on Friday signed an executive order to keep the state government running after the Legislature failed to approve a budget plan to close a two-year deficit of $5.1 billion.

Mr. Malloy's executive order, which went into effect at midnight, triggered deep spending cuts for the state and would amount to a $2.1 billion reduction for the entire fiscal year. The plan slashes education funding, eliminates summer youth-employment programs and cuts rental-assistance programs.

In New Jersey, cities and businesses braced for disruptions over the holiday weekend.

"There's an economic impact for real," Jersey City Mayor Steve Fulop said Friday before the shutdown, adding that the city and local businesses have invested hundreds of thousands of dollars in the event.

Statue Cruises, which runs ferry trips to Ellis Island and the Statue of Liberty from Liberty State Park, said it would honor tickets at its Manhattan location or exchange them for later dates.

A four-day shutdown would impact more than 25,000 expected visitors and cost at least $850,000 in lost revenue to the company and related entities, a Statue Cruises executive said in a statement.

Mr. Christie said he would sign the budget sent to him by Democrats, which includes more than $300 million in additional spending for education and other services, but only if lawmakers passed a bill giving the state more control over its largest insurer. The insurer, Horizon Blue Cross Blue Shield of New Jersey, has strongly opposed the legislation.

Assembly Speaker Vincent Prieto, a Democrat, has refused to put the legislation demanded by Mr. Christie up for a vote, calling it an unfair intervention in the not-for-profit company that shouldn't be part of the budget process.

Kate Linebaugh contributed to this article.

Write to Kate King at Kate.King@wsj.com

(END) Dow Jones Newswires

July 01, 2017 13:28 ET (17:28 GMT)