New Jersey needs money to balance its annual budget. So, over the weekend, Gov. Jon Corzine paradoxedly signed an executive order shutting down the state’s nonessential government services.
Affected were such money-makers as the state lottery, its racetracks and the 12 casinos operating in Atlantic City. Also, the timing was perfect since it happens just as the tourist season gets underway.
Actually, the tracks and the casinos got a break when a judge permitted the horses to run through the July 4 holiday and the gaming regulators ordered the casinos to close as of 8 a.m. Wednesday, July 5.
That deadline might be averted since Corzine on Monday issued another executive order calling the legislature into special session on Tuesday, July 4.
The actions resulted from a political impasse between lawmakers and the Democrat governor.
Corzine insisted the state needs to increase its sales tax from the current 6% to 7%.
Some lawmakers — mostly Democrats in the Assembly — insisted the sales tax increase was unnecessary. They want to cut spending and increase some of the other state taxes to raise the needed money that would balance the state budget. Corzine said no dice to that approach.
"It gives me no joy, no satisfaction, no sense of empowerment to do what I’m forced to do here," Corzine said Saturday when he signed the executive order.
Affected are about 45,000 state employees who were immediately laid off. However, about 36,000 other state workers, those involved in what is considered essential, such as state police, prison guards, mental hospital employees and child welfare workers, remain on the job.
The New Jersey Lottery, considered non-essential, was shut down at 7:55 p.m. on Saturday, although drawing will continue since some people have purchased tickets in advance. However, winning tickets will not be paid until the state has a budget.
It is estimated the state will lose about $2 million in revenue from the gambling shutdown.
Officials explained that the reason the gaming centers were required to close was because state personnel were required to be in attendance. State law requires that representatives of gaming regulators be on hand whenever a casino is operating while the racetracks require Racing Commission representatives to monitor both live and simulcast wagering.
The tracks were rejected in their bid to a New Jersey appellate court for injunctive relief and reportedly planned to take their case to the N.J. Supreme Court.
Steve Wynn the racing impresario?
That could be the case if the LRW Development group, chaired by the founder and CEO of Wynn Resorts Ltd. (WYNN), is successful in its bid for the right to run Saratoga, Belmont and Aqueduct racetracks.
Actually, LRW Development is one of some 16 groups that have indicated to New York State authorities that it will be submitting a bid for the franchise. And, MGM MIRAGE Inc. (MGM), already chosen to build a facility to house 4,500 video lottery machines at Aqueduct racetrack, is also among the prospective bidders.
Naturally, firms more closely identified with horse racing will be among the groups submitting bids for the NYRA license, as will the existing franchise holder.
Already counted among the bidders are racing giants Churchill Downs Inc. (CHDN) and Magna Entertainment Corp. (MECA).
New York’s Ad Hoc Committee on the Future of Racing requires that all bids be submitted by July 15. The members will then have 30 days to review them before announcing a decision.
Executives don’t seem to stay long under Frank Stronach’s leadership with Magna Entertainment Corp. (MECA).
The most recent one to depart is Paul Celluci, the former Massachusetts governor who joined the company 14 months ago as executive vice president of corporate development.
In parting, Celluci will receive severance of $765,000 in 12 monthly installments as well as a monthly payment of $10,000 for consulting services through Jan. 1, 2007.
Some half-dozen top-level executives have left the Ontario, Canada, based horse racing company since it was spun off from its auto-parts company parent.
THE INSIDER: WMS Industries Inc. (WMS) and International Game Technology (IGT) are expected to benefit should the Arkansas Racing Commission agree that video poker machines are games of skill. Such devices were approved by the voters of Hot Springs and West Memphis last fall.
Riviera Holdings Corp. (RIV) shareholders will meet on Aug. 8 to vote on the acquisition offer of $17 per share from Riv Acquisition Holdings Inc. Cutoff date for shareholders will be July 7.
The Mashantucket Pequot Tribe is celebrating the 20th anniversary of Foxwoods Resort Casino in Connecticut, dubbed the world’s largest casino. It began two decades ago as a high-stakes bingo hall.
State prosecutors in Louisiana are expected to contend that Anne Neeb, the former director of the Gaming Control Board and now fulfilling that job in Pennsylvania, owes the state $2,700 for 57 hours she did not work but for which she was compensated.
GTECH Holdings Corporation (GTK) says it will pay a quarterly cash dividend of $0.085 per share on July 28 to shareholders of record on July 14.
Analyst Harry Curtis of JP Morgan raised his rating of International Game Technology to overweight from neutral.