New Jersey —
Numerous non-essential state services have ceased operation indefinitely from July 1. These include road work, the New Jersey Lottery, and the Motor Vehicle Commission, with Atlantic City casinos and racetracks (which require state monitoring) and public beaches and parks closing from July 5.
As a result of Article VIII, Section II, paragraph 2 of the New Jersey State Constitution, the state is required to determine all debts for "as far as can be ascertained or reasonably foreseen" and provide for them in a single budget act. As the 2005-2006 Fiscal Year for the state ended with June 31 and the 2006-2007 budget has not passed the state is blocked from expending any money, also by VIII, II, 2. The current ascertainment shows the state ending up in the red by 4.5 billion USD.
The main cause of the problem is a furious deadlock between the Democratic majority is the New Jersey General Assembly, the lower house of the New Jersey Legislature, which is given the power of starting the budget, and the Democratic Governor of New Jersey Jon Corzine. The main concern is Corzine's plan to raise taxes, such as the sales tax. The Assembly majority dislikes this and some in the New Jersey Senate, which has the power to block the budget, also disagree with his measure.
Originally the racetracks were to close with the state lottery, however a court order has kept them running past the 4th. The casinos attempted to get a similar exemption, but that was definitively rejected by the New Jersey Supreme Court. "Critical" services like the New Jersey State Police, the state's prisons, and hospitals will continue to operate without funding. All non-essential employees of the state were given leave from July 1 on.
All 12 casinos in Atlantic City locked their doors for the first time in the 28-year history of legalized gambling in New Jersey.  Casino inspectors, who are state employees, are no longer working. While the casino floor is shut down, many casinos have remained open for hotel, restaurant, and entertainment business.
Members of both houses of the Legislature have been kept in the capital, Trenton, to help a speedy passage.
A similar situation occurred in Minnesota exactly one year ago as the Legislature failed to pass the budget before they were forced to adjourn by a hard-wired date in the state constitution.
"Minnesota state government shuts down" — Wikinews, July 1, 2005
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Parts of New Jersey government stopped as budget fails to clear Legislature in time