July 3 (Bloomberg) -- New Jersey Governor Jon Corzine kept state government shut for a third day as he and fellow Democrats in the Legislature negotiated a budget for the fiscal year that began July 1.

About 45,000 state employees were told over the weekend to stay away from work until a budget passes. Sales of lottery tickets and hunting and fishing licenses were frozen, courts and motor-vehicle offices and inspection stations were closed, and non-emergency road projects halted.

Corzine ordered the shutdown after lawmakers failed to pass a budget by a state constitutional deadline. Some members of Corzine's own party won't support his proposal to raise the state sales tax to help eliminate a $4.5 billion deficit. Without a budget, the governor has no authority to spend money.

``People's economic lives and well-being are at stake,'' Corzine said in a press conference in his office this afternoon. ``There's no game here. This is not a power play. We have a constitutional obligation to pass a balanced budget.''

Corzine's record $30.9 billion plan would raise the sales tax to 7 percent from 6 percent and expand it to more services. He also called for placing new levies on cigarettes and luxury cars, cutting higher-education funding, freezing aid to most schools and increasing property-tax rebates by 10 percent.

First Workday

Today is the first workday since the shutdown. State parks, beaches, campgrounds, historic sites, racetracks and Atlantic City casino floors are set to close after the July 4 holiday if there is no agreement.

About 36,000 workers, including state police, prison guards and child-welfare employees, are considered essential and working. Corzine said arrangements may be made after a budget is passed to ensure that workers forced to take the day off get paid for time they missed.

Corzine and legislative leadership met for more than four hours last night at the governor's mansion in Princeton, after an Assembly budget panel adjourned earlier in the day without proposing a budget bill. Negotiations continued today at the governor's office in Trenton.

State of Emergency

Corzine said he signed an executive order today extending a state of emergency and convening a session of the state legislature starting at 9 a.m. tomorrow to last until a budget is passed. The governor plans to address legislators himself to urge them to put forth a budget bill that he can sign.

There are alternatives to the sales tax increase, such as a wage tax and levies on advertising and seasonal rentals, Corzine said today, though many of those ideas don't have support in the legislature.

``If the legislature has that idea that they believe they can put forward, they should present a budget to the budget committee,'' Corzine said. ``There has not been a budget put forth from the budget committee itself. Put it onto the floor, pass it, negotiate it with the senate and put it on my desk.''

Democratic State Senate President Richard Codey, who met with Corzine earlier today, told senators to be prepared to be at the Statehouse every day until a budget is passed.

$1 Billion Apart

Democrats control both houses of the Legislature. Any budget bill must pass the Senate and Assembly before reaching Corzine. Under state law, any bill with a tax increase must originate in the Assembly.

As of June 30, Corzine's administration and Assembly Democrats were $1 billion apart in their plans, according to state Treasurer Bradley Abelow. Assembly Democrats had proposed a $30.4 billion budget that doesn't include a sales-tax increase and would keep property-tax rebates at fiscal 2006 levels and extend a temporary disability insurance tax on wages.

Democratic Assembly Speaker Joseph J. Roberts Jr. today said he doesn't believe Corzine's sales-tax increase has enough support in the Legislature and challenged the governor to prove him wrong.

``This is having an enormous toll on the people of New Jersey and it's only going to get worse if this shutdown continues and intensifies,'' Roberts told reporters after meeting with the governor. ``If the sales tax is the only revenue, let's identify 41 assembly members, 21 senators who support it. If that can be done, I will post a bill within 24 hours to advance it. And if that can't be done, we need to look at other alternatives. We've got to solve this problem.''

Credit Ratings

Corzine, the former chief executive officer of Goldman, Sachs & Co., said during his election campaign that he would use his Wall Street experience to fix the state's finances. He took office in January, inheriting the budget deficit, a lack of funding for pensions, schools and road construction, and voter anger over property taxes and corruption in state government.

The state's credit ratings were last raised by Standard & Poor's in 2005 after then Acting Governor Codey reduced the use of one-time sources of revenue to balance the budget.

Richard Raphael, an analyst with Fitch Ratings in New York, said the credit-rating company will be monitoring the shutdown situation closely because ``obviously a prolonged shutdown would have an economic and revenue affect.''

New Jersey's next set of bond payments due on July 15 don't require appropriation from the budget and July 1 payments were made on time, he said. The next set of payments due that will need approval by lawmakers come due Aug. 15. Those appropriation- backed bonds are rated A+.

``We would expect that they will find a way to deal with those payments one way or another,'' he said.

Tourism

Tourism, the second-largest industry in New Jersey, generates $32 billion in economic activity a year and supports 430,000 jobs, according to the state commerce department. Casinos, one of the state's biggest tourist attractions, by law can't operate without state gambling inspectors on duty.

New Jersey attracts the highest share of its overnight tourists, about a third, during the July through September quarter, according to a visitor profile conducted for the state in 2004.

The state's 12 casinos, which employ about 46,000 at its casinos and hotels, today lost a court bid to remain open during a shutdown. Meadowlands Raceway and Monmouth Park Racetrack lost a similar bid yesterday.

Unless a budget is enacted, all gambling operations will cease at 8 a.m. July 5, historically the start of the most- profitable two months for the industry, said Daniel Heneghan, a spokesman for the state Casino Control Commission. New Jersey stands to lose $1.2 million daily in tax receipts, earmarked for senior citizens projects, he said.

Corzine said today it's still possible the casinos could stay open.

``It's still in the courts, and it's very possible the courts court could rule that a casino inspector is essential and they could stay open,'' Corzine said.

To contact the reporter on this story: Stacie Servetah in Trenton at sbabula@bloomberg.net

Last Updated: July 3, 2006 16:29 EDT