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N.J. government shutdown begins with budget vote stalled

Prieto says the budget is being held hostage to Christie's demand on Horizon Blue Cross. Christie calls the crisis "completely avoidable."

Governor Chris Christie speaks at a news conference in Trenton, N.J., Tuesday, June 27, 2017.
Governor Chris Christie speaks at a news conference in Trenton, N.J., Tuesday, June 27, 2017.Read moreAP Photo/Seth Wenig

TRENTON — Gov. Christie ordered a shutdown of state government and called for lawmakers to convene for a special session Saturday morning after the Legislature failed to pass a budget Friday.

Christie issued an executive order early Saturday morning declaring a state of emergency while maintaining essential services such as hospitals, correctional facilities, and state police operations. Other government services such as state parks and Motor Vehicle Commission offices will be closed.

The shutdown stems from a stalemate between Christie and Assembly Speaker Vincent Prieto (D., Hudson) over legislation to restructure New Jersey's largest health insurer.

Christie, a Republican, earlier said he told the leaders of the Democratic-controlled Legislature that he would sign their budget priorities into law if they also passed a bill that would establish a process affecting Horizon Blue Cross Blue Shield of New Jersey. Horizon would be required to develop a plan to allocate excess surplus to benefit policyholders and improve "the overall health status of all New Jersey residents."

The Senate passed the Horizon legislation on Thursday. But Assembly Speaker Vincent Prieto (D., Hudson) refused to consider the bill, calling it a "Christie tax" on Horizon's 3.8 million policyholders and declaring the budget shouldn't be "held hostage" to Christie's demand on Horizon.

About half of Prieto's 52-member Democratic caucus declined to vote on the $34.7 billion fiscal year 2018 budget on Thursday, citing concerns that Christie would gut about $325 million in spending. That includes $150 million in school funding, as well as aid for cancer research, prisoner reentry programs, and dozens of other line items.

By Friday evening, lawmakers had failed to break the impasse, voting by 26-25 with 24 abstentions on the budget, falling short of a 41-vote majority. Under the New Jersey constitution, the state must pass a balanced budget no later than 12:01 a.m. July 1, the start of the new fiscal year.

"If there's an unusual fit of sanity on the part of the speaker and they send me a budget tonight, I'll be here to sign it," Christie told reporters earlier at a news conference, following a meeting with Prieto, Senate President Stephen Sweeney (D., Gloucester), and other legislative leaders. "If they leave tonight, I'll leave when they leave. I'm not happy about this. This is completely avoidable."

New Jersey's only government shutdown came in 2006, when Gov. Jon S. Corzine, a Democrat, feuded with his own party over his proposal to raise the sales tax.

In the event of a shutdown, Motor Vehicle Commission offices, state parks, and state beaches would close, Christie said. Essential services, such as the state police, would continue to operate. The governor has some discretion in determining what services are essential.

Liberal and labor groups rallied to support Prieto, giving him a standing ovation as he walked into a Statehouse Annex committee room to declare he wouldn't budge on the Horizon bill.

"That's not good public policy," he said.

Christie, though, seized on a revelation Friday that a decade ago, Prieto had co-sponsored legislation that would have authorized the commissioner of the state Department of Banking and Insurance to dedicate Horizon's excess surplus to charity care for hospitals.

The 2006 bill didn't advance.

"Now, I can't say that I'm stunned by hypocrisy in Trenton, but it's outrageous," Christie said. "So I don't think we can assume any longer that the speaker's reticence to do this has anything to do with principle."

"We need to find out why the speaker's really doing this," he added.

For his part, Prieto told reporters, "That was over a decade ago. I was just here a couple of years." He said he didn't recall his rationale back then.

"Things change and things evolve," he said, adding that uncertainty in Washington over the Affordable Care Act made today's proposed Horizon legislation reckless.

Christie says the legislation is needed to make Horizon more transparent; the bill would require greater financial disclosure and change the company's 15-member board to include three members elected by subscribers. It would also designate Horizon as the state's insurer of last resort.

Christie has spent months ripping the nonprofit company's executive compensation practices and arguing that the insurer isn't doing enough to help the poor, drawing comparisons to liberal politicians such as Bernie Sanders (Ind, Vt.) and Elizabeth Warren (D., Mass.).

Horizon had $2.4 billion in reserves at the end of 2016. It says the money is needed to protect against risk and that dedicating surplus for the broader public benefit would force it to raise premiums.

The insurer has rallied opposition against the bill. A coalition that's funded in part by Horizon has also been running advertisements grilling Christie and Sweeney.

"Steve Sweeney is selling out millions of Horizon policyholders, siding with Chris Christie to score political points, and allowing the governor to take over the state's largest health insurer and raid its reserve funds," the narrator intones in one digital ad. "Tell your legislator: Hands off our health care."

Sweeney said on Friday, "I'm really sorry that people's egos are getting in the way of the public."

As the reality of the imminent shutdown sunk in, Christie and lawmakers tried to find a possible exit ramp.

Assembly Minority Leader Jon Bramnick (R., Union) said some Democrats had approached him about replacing the speaker.

But that didn't appear likely to happen as of yet.

Christie, describing himself as "Mr. Reasonable," said he told legislative leaders that he welcomed other ideas that could replace the Horizon legislation.

"I said, my offer's on the table. You don't like my offer, counter it. I'm always willing to listen," he said.

Democrats did not make any such offers at the meeting, Christie said. But during an Assembly Democratic caucus meeting later in the day, lawmakers briefly discussed a potential counteroffer — legislation that would eliminate a requirement that local governments publish legal notices in newspapers.

Christie and Democratic leaders tried to pass that bill last year but failed amid intense public backlash.

There wasn't support in the Democratic caucus on Friday for the bill, Prieto told reporters.

Lawmakers were ready for a long night.

Prieto held a vote on the budget around 7:30 p.m. and left the voting board open for hours. He said he was "doing my duty to keep government open."

"Members that should be voting on this are holding the budget bill hostage and that's not right," he told reporters around 8 p.m.

Asked why he wasn't trying to persuade members to vote for the budget, Prieto said that "everybody knows where everybody is."

"I'll entertain anything," he said. "I'm just waiting."​

Bramnick said he didn't think that was productive. "Sitting here and staring at a board is not negotiation," he said.

The budget drama was replete with reports that Prieto had sent an emissary to meet with Christie Thursday afternoon. But Christie said there was no meeting.

"You know that was baloney, right?" Christie said at the news conference.

"I was sitting upstairs all day," he said. "I was so bored yesterday I was watching the Legislature on my computer. … Why wasn't an emissary able to find me?"

Partial list of what shuts and what stays open:

Open: State Police, state correctional facilities, key child welfare services, state hospitals and treatment facilities, NJ TRANSIT, and operations linked to the health, safety, and welfare of the public, including certain environmental and health monitoring. Also the lottery, casinos and racetracks.

Unemployment Insurance and disability determination services remain operational.

Child abuse hotlines, protection services and response teams will continue to operate. Schools for children with special needs will remain open.

Closed: All Motor Vehicle Commission agencies and inspection stations (except online services). All state parks, recreation areas, forests, and historic sites, including Liberty State Park Also, permitting offices for Air, Historic Preservation, Land Use, Site Remediation, Solid Waste, and Water Supply; Green Acres and Blue Acres offices; Office of Dispute Resolution; Office of Permit Coordination; most of the Division of Fish & Wildlife (Wildlife Management Areas and on-line services will not be impacted); NJ Geologic Survey; and Rebuild by Design projects.

One Stop Career Centers (state not county services).  Travel and tourism welcome centers. The public will not be able to obtain copies of birth and marriage certificates, or copies of adoptees' original birth certificates.