Background
During the 2005 gubernatorial election Corzine, a former executive at Goldman Sachs, claimed he was "not encumbered by an old culture, historical entanglements and the status quo" and had a plan to use his experience to overhaul the budget process and trim spending. When he introduced his first budget as governor, the $30.9 billion plan included $2 billion in spending cuts as well as increases in taxes on tobacco, alcohol, and luxury cars. The most controversial item in the budget was an increase in the state sales tax.
The President of the New Jersey Senate, former Governor Richard Codey, had stated his support for Corzine's budget including the tax increase. The stalemate in the negotiations had been with the New Jersey General Assembly, whose Speaker, Joseph J. Roberts, strongly rejected the Governor's plan. At the time Roberts said, "Our caucus feels overwhelmingly that there are much more appealing alternatives to balance the budget than a sales tax increase."
The New Jersey State Constitution, under Article VIII, Section II, paragraph 2, requires that the state's expenses for "as far as can be ascertained or reasonably foreseen" (i.e., the fiscal year) be provided for in a single budget act. If this does not occur before the previous budget lapses, the same section also outlaws any expenditure of money. The constitution also includes a provision in the previous paragraph preventing appropriations from going into red ink; the New Jersey Supreme Court had interpreted this to exclude loans made to cover shortfalls, and Corzine claimed that the state had a poor credit rating anyway.
In three of the previous five years, the legislature had failed to meet the June 30 deadline. On each of those occasions an agreement had been reached by the morning of July 2. Aides to Corzine claimed that the governor felt he had no choice but to order the shutdown under the state's Constitution.
Read more about this topic: 2006 New Jersey State Government Shutdown
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