Trenton, New Jersey – New Jersey has reached a new budget that will end a historic shutdown that forced Atlantic City’s 12 casinos to close and furloughed 45,000 state workers, a statehouse source said on Thursday.
The lawmakers accepted Gov. Jon Corzine’s plan to hike the sales tax to 7 percent from 6 percent and spend half of the USD 1.1 billion this will raise to lower property taxes, another statehouse source said. Both sources requested anonymity.
In November, New Jersey’s residents will be asked to approve a constitutional amendment to set aside half of the sales tax increase over 10 years for property tax reduction.
Spokesmen for Democratic Gov. Jon Corzine and Democratic Assembly Speaker Joseph Roberts, who had blocked the sales tax increase until now, were not immediately available.
Corzine, who had proposed a USD 31 billion budget, partly shut the state government on Saturday, when New Jersey missed its fiscal deadline. He ordered nonessential state workers sent home, a category that included casino inspectors.
Atlantic City’s casinos were allowed to stay open until Wednesday morning. The companies stood to lose up to USD 20 million a day in revenues, an industry official said. The casinos pay New Jersey about USD 1.3 million a day in taxes.
Atlantic City, 125 miles (200 km) south of New York City, draws 33 million visitors a year, according to its Web site. Major casinos there include those owned by Harrahs Entertainment Inc., Trump Entertainment Resorts Inc., MGM Mirage and Boyd Gaming Group .
Corzine also stopped lottery ticket sales, and shut state beaches, parks and racetracks in Monmouth County and the Meadowlands.
Only state troopers, corrections officers and other officials deemed essential to protect residents‘ health, safety and welfare continued to work as lawmakers battled over how to close a USD 4.5 billion budget gap.
Democratic Senate President Richard Codey on Thursday afternoon told reporters he expected a budget accord would be reached on Thursday that will let the casinos reopen.
Asked whether he expected a budget deal would be reached on Thursday, Codey said: „Yes, I do.“ He added later: „Absolutely, progress is being made.“
Corzine on Thursday morning had urged legislators to resolve the budget crisis.
„This is a deplorable set of circumstances and the people of New Jersey have every right to be angry,“ Corzine said. „If you are trying to get out of a hole, why don’t you just stop digging?“
Casino Stocks and Bonds rise
Stocks of major casino companies rose after news of the budget accord, with Trump Entertainment Resorts shares gaining nearly 2 percent.
Shares of Harrah’s Entertainment, the world’s largest gambling company, were up 2 cents, or 0.03 percent, at USD 69.78, while Boyd Gaming stock was up 71 cents, or 1.8 percent, at USD 40.06 during late afternoon trading on the New York Stock Exchange. Trump Entertainment Resorts stock was up 60 cents, or 3.1 percent, at USD 20.10 on Nasdaq.
Bonds of Trump Entertainment Resorts also rose after news of the budget deal.
Trump’s notes with an 8.5 percent coupon due in 2015 traded at 96 cents on the dollar, up from 95.75 cents before the news. Analysts had said Trump Entertainment was more vulnerable to the shutdown than other gaming companies because all of its revenues come from Atlantic City. (Additional reporting by Joan Gralla, Paritosh Bansal and Dena Aubin)