As the time this column was written, New Jersey had until June 30 to balance its fiscal 2009-10 and 2010-11 budgets. This meant plugging deficits that totaled more than $10 billion. And it’s going to get worse.

New Jersey is an interesting study in how politics is responding to the ravages of this recession.

As I write this the state had until June 30 to balance its fiscal 2009-10 and 2010-11 budgets. This meant plugging deficits that totaled more than $10 billion. And it’s going to get worse. In testimony before lawmakers at the start of this year, David Rosen of the nonpartisan Office of Legislative Services said 2009 was the worst in modern state government history for tax collections: Aggregate revenue was down 12 percent.

Atlantic City’s woes have played their part, as you’ll see in this issue in a feature story titled “Turning the Tide” by veteran gaming writer Paul Doocey.

Revenue from the 8 percent direct tax on casino win was down 14 percent in 2009 as GGR fell more than 13 percent, the third straight year of declines. The industry shed more than 3,400 peak season jobs and $91 million in wages.

Rosen said that even if a “real recovery” was possible next year, it will take until 2014 to get the state’s finances to where they were in 2008.  “It is going to be very hard for us to simply grow out of this problem,” he said. “It is going to have a profound impact in the years going forward.”

The ensuing months saw war break out between Republican Gov. Chris Christie and the Democratic-controlled Legislature over how to eliminate the deficits, with Christie and his partisans in the Senate and Assembly mostly coming out on top, which means cuts in education, municipal services, pensions and public-sector jobs. 

Last month, in the middle of this pressure-cooked atmosphere, five lawmakers, all Democrats, announced plans to convene a “gaming summit” aimed at devising “comprehensive solutions” to help the casinos and a severely ailing racing industry.

Mainly they’ll be trying to resolve their opposing positions on VLTs at the state’s three tracks. Four of the legislators are from southern counties, and led by Senate President Stephen Sweeney and Sen. Jim Whelan they want to preserve Atlantic City’s casino monopoly. Whelan was once mayor of Atlantic City, and his district includes the embattled seaside resort. On the other side is veteran Sen. Jim Lesniak, representing Union County in the north, who believes with the tracks that slot machines are necessary to save New Jersey racing from extinction. Lesniak also has floated proposals to legalize sports betting and gambling and betting on the Internet. Another northerner, Assistant Senate Majority Leader Paul Sarlo, has called for a full-scale casino at the massive Meadowlands Sports Complex.

The casinos, which pay $30 million a year in purse subsidies to keep VLTs out of the tracks, say the last thing they need in this economy, hemmed in as they are by competition in Pennsylvania, Delaware, New York, Connecticut (and Maryland in the next couple of months), is for people to have more reasons not to come to Atlantic City. They have a strong case. (Sweeney has vowed that no bill to expand casino gambling outside Atlantic City will see the light of day in his Senate.)

Racing and its champions in Trenton have an argument that is equally strong, for without slot machines the tracks are almost certain to die - and as is true just about everywhere else it will have been the legalization of casinos that ultimately killed them.

The goal of the organizers of the summit is a constitutional amendment authorizing some form of expanding gambling. They appear to think that the way to attack the problem of too much supply is to enable more supply. (Massachusetts, Ohio, Kentucky, Alabama, Florida, Texas, take note.)

Then there is Christie, who supports giving the Revel boondoggle a $350 million break on sales and room taxes (which most New Jerseyans oppose, according to a recent poll). The governor formed a special commission earlier this year to study the future of casinos and racing. Led by a former chairman of the N.J. Sports and Exposition Authority, which operates the Meadowlands, the commission’s report was due June 30.