By Brent Johnson and Susan K. Livio | NJ Advance Media for NJ.com

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Photo by Aristide Economopoulos | NJ Advance Media for NJ.com

State Assembly Speaker Vincent Prieto (left) and state Senate President Stephen Sweeney (right) listen to Gov. Chris Christie deliver his state budget speech in February.

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New Jersey's leaders have only five days left to finalize a state budget for the fiscal year that begins July 1 — the final budget of Gov. Chris Christie's tenure.

But things haven't been going well lately.

The Republican governor and Democrats who control the state Legislature have been discussing a complex three-way deal in negotiations over the $35.5 billion budget. But as last week came to an end, the sides were stuck in a dramatic stalemate.

And if they don't reach an agreement soon, all of this could lead to the first state government shutdown since 2006 — and only the second in Garden State history.

Here's what you need to know about the scenario as lawmakers return to the Statehouse in Trenton for budget hearings:

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Photo by Steve Hockstein | NJ Advance Media for NJ.com

Christie holds a town hall in Fair Lawn last year.

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THE BACKSTORY

Technically, it all started with education funding. For months, Christie, state Senate President Stephen Sweeney (D-Gloucester), and state Assembly Speaker Vincent Prieto (D-Hudson) differed in their plans to revamp the state's school funding formula.

But last week, Sweeney and Prieto agreed on a deal that would add $125 million to education in the budget — $100 million in new K-12 funding and $25 million to expand pre-kindergarten. It would also reallocate $46 million in existing school funding to some of the state's neediest districts.

The proposal is far from the formula overhaul that Christie called for earlier in the year. But Sweeney has threatened to hold up the budget if Christie didn't agree to some of the school funding changes — a move that could trigger a government shutdown.

In recent days, Christie has promised to support the Democrats' school plan, but in exchange for the passage of two bills. One would use state lottery revenue to help shore up New Jersey's beleaguered public-worker pension system. The other would extract $300 million from the reserve fund from the state's largest health insurance company, Horizon Blue Cross Blue Shield of New Jersey, to pay for drug addiction treatment — the focus of Christie's final year as governor.

All of this is presented with the backdrop that Christie has only six months left in office, while all 120 seats in the Legislature are up for grabs in November's election.

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Photo by Aristide Economopoulos | NJ Advance Media for NJ.com

Prieto chats with Sweeney earlier this year.

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SO WHAT'S THE PROBLEM?

In short, the Horizon legislation is the main sticking point.

Republican lawmakers are vehemently opposed to Sweeney and Prieto's school plan, calling it a "backroom political deal" that would not benefit taxpayers. But Christie is reportedly on board with the proposal, albeit with minor tweaks that are OK with Sweeney and Prieto.

And the lottery measure? The plan would reduce the pension system's $44 billion unfunded liabilities by $13.5 billion. Though critics have denounced it as a gimmick, Democrats are open to giving Christie that part of the deal.

But Democrats are bitterly split on the Horizon bill.

The Senate is moving ahead with a bill by state Sen. Joseph Vitale (D-Middlesex) that would give the state insurance commissioner authority to decide how much Horizon may keep in its reserve account. Excess revenue would be diverted to a fund that would fund public health causes, such as drug treatment or other services for people who are uninsured.

The bill is expected to be debated and voted on by the Senate's budget committee Monday and the full Senate Thursday.

Prieto, though, is staunchly against tying any type of Horizon measure to the budget.

"There is in no way, shape or form we are going to take up a bill of that nature against one nonprofit," the speaker said Thursday.

Prieto said he'd be open to discussing a broader bill encompassing other nonprofits — but only after the June 30 budget deadline.

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HOW IS HORIZON MIXED UP IN THIS?

Christie has spent months calling for lawmakers to send him the legislation involving Horizon, a not-for-profit organization that made $11.5 billion in revenue and paid about $515 million in federal and state taxes and insurance assessments in 2015, according to the company's website. Horizon also held about $2.4 billion in reserves last year.

The governor has eyed a portion of that money to help pay for programs to fight the opioid addiction epidemic in the state.

Christie also says the bill would add “transparency,” giving the state Department of Banking and Insurance next year the authority to "examine the size of Horizon's surplus" and deposit any amount deemed excessive into the Health and Wellness Fund. Plus, it would require Horizon post online information about the compensation of its top officers.

Christie escalated the matter Wednesday when he announced the state Department of Human Services levied a $15.5 million fine on for "systemic" mishandling of thousands of claims over the past year and for misreporting some financial information to the state. At the news conference, Christie also renewed the call for the legislation.

And two days later, Christie upped the ante again by ordering state agencies to publish orders, opinions, or fines they levy against any groups under an agency's purview.

Horizon officials, backed by national conservative organizations and state business groups, say the governor’s money grab would jeopardize the company’s bottom line and potentially drive up premiums for the company’s 3.8 million policy holders.

The amount it holds in reserves is needed to “protect members against risk and unexpected events,” and amounts to 75 days' worth of claims, according to Horizon.

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COULD THIS LEAD TO A SHUTDOWN?

Under the state constitution, Christie has until the end of Friday to sign a balanced budget. If that doesn't happen, it could trigger a shutdown of the state government.

Asked Thursday if a shutdown is possible, Sweeney said: "Listen, who knows?"

Prieto said he is "not looking" for one.

“I’ve made a lot of concessions with school funding, with many things," he said. "So, if somebody wants to shut down government, it ain’t going to be me.”

Many top lawmakers believe there is still the pathway to a deal this week, according to multiple legislative sources who asked for anonymity to speak candidly about the situation. But another source said a shutdown is still "on the table."

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WHAT WOULD A SHUTDOWN ENTAIL?

If a shutdown is enacted, that would mean state parks and state-run beaches would close. Tens of thousands of state workers would be furloughed. Lottery ticket sales would halt. So would road construction projects. And you couldn't go to court or the Motor Vehicle Commission.

But essential operations — such as prisons, the State Police, child protection services, and psychiatric hospitals — would continue. Casinos in Atlantic City would also remain open, thanks to a state law passed in the wake of the last government shutdown.

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Photo by Michael Dempsey | The Jersey Journal

Liberty State Park in Jersey City is one of the many state parks that could be temporarily closed amid a state government shutdown.

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SO THIS HAS HAPPENED BEFORE?

Yes. Once, in 2006, when Gov. Jon Corzine and his fellow Democrats who controlled the Legislature couldn't agree on a budget.

Government services across New Jersey shut down for eight days — including casinos — costing the state millions of dollars. Corzine famously brought a cot into the Statehouse as he and lawmakers held late-night negotiations.

A few years later, in 2011, when a similar budget impasse caused the threat of another shutdown, Christie swore he would take a different tact than his predecessor. He told a conservative group that he told lawmakers: "If you guys close the government, I'm getting in the black SUVs, I'm getting the state troopers, I'm ordering a pizza, I'm opening a beer and I'm watching the Mets."

A shutdown didn't happen that time.

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MORE COVERAGE:

To break budget impasse, lawmaker calls for control over Horizon's surplus

Christie just ordered his own agencies to let public know more as he fights Horizon

Is Christie raid on Horizon's reserve fund all but dead?

N.J. Democrats at odds over proposed budget deal with Christie

Lawmakers reach $171M deal on N.J. school funding

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NJ Advance Media staff writer Samantha Marcus contributed to this report.

Brent Johnson may be reached at bjohnson@njadvancemedia.com. Follow him on Twitter @johnsb01. Find NJ.com Politics on Facebook.

Susan K. Livio may be reached at slivio@njadvancemedia.com. Follow her on Twitter @SusanKLivio. Find NJ.com Politics on Facebook.