07/04/2006 12:00AM

Jersey budget crisis lingers


New Jersey racing faced a shutdown effective 12:01 a.m. Wednesday if the state legislature failed to break a budget impasse.

Gov. Jon Corzine ordered a closure of state government when the legislature failed to meet the constitutional deadline of July 1 to deliver a balanced budget. Corzine shut all "nonessential" agencies, including the New Jersey Racing Commission. State law requires regulatory oversight of any gambling.

An appellate court order allowed Monmouth to run through Tuesday, Independence Day, without interruption.

The next move is up to the politicians. Legislators have resisted Corzine's demand for an increase in the state sales tax from 6 to 7 percent to close a projected $4.5 billion budget deficit.

Corzine called both houses into an unprecedented July 4 budget session. "We must stay here until we meet our constitutional obligations," Corzine said in a speech to the lawmakers.

Unless a budget was passed, New Jersey was to halt all live racing, simulcasting, and account wagering. As of late Tuesday afternoon, no agreement had been reached.

The Meadowlands was scheduled to run a harness card Wednesday night, and Monmouth was next slated to race Thursday afternoon.

"As of 12 midnight, we are closed until passage of the state budget," said Bob Kulina, Monmouth's vice president and general manager, on Tuesday. "Hopefully the issues will be resolved so we can resume with our next scheduled live racing. We regret any inconvenience to our fans, horsemen, and employees. We have our fingers crossed."

Casinos in Atlantic City were to close at 8 a.m. Wednesday. The state's lottery suspended operation Saturday.