N.J. government shutdown looms as Democrats fail to pass budget New Jersey's only previous government shutdown was caused by a 2006 budget impasse, and 45,000 workers considered nonessential were told to stay home during the eight-day stoppage.

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A controversial Senate bill would funnel reserves from Horizon into a fund for anti-addiction

The Senate had the first hearings on the Horizon bill on Monday

“The Horizon bill is an unfair Christie tax on the insurer’s 3.8 million policyholders,'' Prieto said.

TRENTON — New Jersey edged closer to a government shutdown Thursday as Democrats failed to agree on a budget deal with Gov. Chris Christie.

The breakdown threatens to close state parks and beaches, shut down the state lottery and send thousands of state workers home heading into the weekend before July 4. It could also cost the Assembly speaker his job, some said.

The Legislature left Trenton on Thursday with plans to return Friday, the last day of the fiscal year. If an agreement can't be reached, Christie may have to dust off a plan to shut down all nonessential services

As they walked out the door, Christie and Democratic leaders traded blame for the breakdown.

"There should be champagne here, streamers," Christie said during a news conference, referring to the fact that Democrats and Republicans had agreed on a fiscal plan for the coming year.

Bipartisan support isn't where the bill fell short. The dispute on Thursday, as in 2006, when the government shut down under Gov. Jon Corzine, was between Democrats.

The party's lawmakers were split Thursday over a bill backed by Christie, a Republican, that would give the state access to the reserve fund of Horizon Blue Cross Blue Shield of New Jersey, the state's largest health insurer. Christie wants to use the insurer's reserves to support a fund that would be used for drug treatment for the poor and uninsured, as well as other health care services.

Although that bill is separate from the budget, Christie has told the two top Democrats in the Legislature that he wants the Horizon measure, as well as a bill to transfer the state lottery to the public employee pension fund, sent to his desk before he considers their budget, which includes about $350 million more in spending than what he has proposed.

Lawmakers mostly support the lottery bill, and it is likely to pass the Legislature. But Prieto, D-Secaucus, is refusing to post the Horizon bill.

At about 4 p.m., Prieto put the budget bill (A-5000) to a vote. Needing 41 votes for passage, the bill fell far short — it was 24-21 in favor, with 35 members of the Assembly not voting.

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Prieto immediately called the session into recess and in an impromptu news conference chastised lawmakers who didn't vote and "sat on their hands" when the bill was up.

"They actually, in essence, want to shut down government," Prieto said.

Asked whether government would be shutting down, Prieto said, "I don't know." But he said that "the bill will go back up again."

It didn't on Thursday. Prieto's office said the Assembly would return Friday at 1 p.m.

"Hopefully they'll see their way around that shutting down government is not what they're supposed to be doing," Prieto said of fellow Democrats in the Assembly.

About a half-hour after Prieto placed blame on "obstructionist" Democrats, Christie called a news conference to pin the potential shutdown on the speaker. The Senate had earlier passed the lottery and Horizon proposals, giving Christie an argument that his proposals had bipartisan support.

"Now it's up to Speaker Prieto. If Speaker Prieto wants to close the government, this is going to be his decision," Christie said. "We had Democrats and Republicans agreeing on three major priorities."

Christie was rigid in his demands Thursday.

He had laid out his goals during his February budget address, including the lottery transfer, the Horizon reserve and a call for a revised school-funding plan. The legislative leaders agreed on a budget that added about $350 million in spending to Christie's $35.5 billion proposal. When he met last Tuesday with Prieto and Senate President Stephen Sweeney, Christie tied his approval to the passage of the Horizon and lottery plans.

"I'm willing to compromise. That's what divided government is all about. I'm not willing to capitulate," Christie said.

Prieto was also firm in position. He has said the Horizon measure is a "bad bill" and on Thursday said that posting it for a vote "wouldn't feel right to me."

It may cost him his job.

Multiple reports, and rumors in the State House, have said there is a movement in the Assembly to oust Prieto from his speakership. Asked Thursday if he was willing to lose his job over the budget breakdown, he said: "For good conscience and doing the right thing, the answer would be yes."

Some Democrats came to Prieto's defense on Thursday and said they are also against the Horizon proposal. Assemblywoman Valerie Vainieri Huttle, D-Englewood, said it was the wrong time to deal with the Horizon issue.

“There is no reason whatsoever that a last-minute plan to overhaul the state’s largest insurer should stand in the way of ensuring that desperately needed funding continues uninterrupted for programs,'' Vainieri Huttle said. “There is a time and a place for every policy debate, but not at the elevent hour, when so many lives depend on the annual appropriations act. Using it as leverage to score a political win is dangerous and ill-advised.”

Before the aborted vote, lawmakers spent much of the day in backrooms, where they were having “spirited conversations” about the choices before them, said Assemblyman Gary Schaer, who heads the budget committee.

Schaer, D-Passaic, is opposed to the Horizon bill and its being tied by Christie to his support of the budget. There are “some legitimate questions that people have” about the bill, he said, but those questions need time to be answered.

“We’re talking about a Horizon bill that we’ve not had the chance to study, to understand its ramifications,” he said.

Schaer said Democrats have already met a majority of Christie’s requests: a 2018 budget, a school-funding plan and a bill to transfer the lottery to the pension system in an effort to reduce its large unfunded liability.

“We’re certainly agreeable to three of the four," Schaer said. "The fourth is premature.”

While the Assembly could not agree, the Senate moved ahead with Christie's agenda. The Horizon measure (S-4) passed in a 21-15 vote, while the lottery bill (S-3312) passed 36-2.

Earlier, a ranking Assembly Republican said he was bracing for a government shutdown.

"I brought a change of clothes,'' GOP Assembly leader Jon Bramnick said Thursday. "I learned that about 10 years ago.''

The reference was to the 2006 shutdown under Corzine. At that time, 45,000 workers considered nonessential were told to stay home during the eight-day stoppage. Casinos went dark. State parks and beaches closed. People could not renew their driver's licenses or buy lottery tickets.

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Bramnick said the dispute at this point is among Democrats, and that Christie's only role is to sign or alter whatever spending plan is sent to him.

"The last time I remember [this situation] is when Jon Corzine was governor, and Democrats didn’t get along back then, and they couldn’t pass a budget and it went into overtime,'' Bramnick said. "I don’t think it’s necessary to go into overtime. What I think should happen is people should talk to each other and they should compromise.''

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N.J. Budget Update - June 28, 2017 As a June 30 deadline to pass a budget creeps ever closer, Democratic lawmakers remain at odds with Gov. Christie over a key policy question. Political columnist Charlie Stile and staff writer Nicholas Pugliese discuss the ongoing negotiations.

Some Democratic priorities at risk

The Democrats’ $34.7 billion budget proposal includes the added spending but on paper is less than what Christie proposed, because it assumes that about $1 billion generated from the lottery that normally goes to the state would be diverted to pension funds.

Prieto suggested that Democrats should send a budget to Christie even without the guarantee that the governor would support the additional spending.

Even in a pared-down budget, Prieto said, “you got $1 billion for higher education, you have $15 billion to K-12 [education], you have all those things — a lot of priorities, a lot of property tax relief — a lot of that’s in that budget. It is still a budget that a lot of those good things that we want are in that budget.”

Sweeney, however, has said he wouldn’t allow the Senate to pass a budget bill without having reached an agreement with Christie to leave almost all Democratic spending priorities, such as extra school funding and tuition aid grants, untouched.

“I don’t like everything that goes on here. I really don’t,” Sweeney said Thursday night, referring to how business is conducted in Trenton. “But there’s realities in life, and the governor gets to line-item things out of a budget.”

Sweeney argued that passing the Horizon legislation is the responsible thing for the Legislature to do.

“This isn’t politics for me. This is about people. And I am not going to let people be sacrificial lambs because we’re worried about the governor” scoring a political victory, Sweeney said.