Gov. Chris Christie is asking his cabinet members to prepare contingency plans in case he needs to shut down New Jersey's government if he can't reach an agreement on a new budget.
The memo asks cabinet members to detail crucial services and warns some departments would have few or no employees during a shutdown.
Christie and lawmakers must agree to a new budget by July 1.
The main disagreement is over how and how much to cut taxes. Christie wants a 10 percent income tax cut.
Senate leaders want a 10 percent property tax credit targeted at low- and middle-income earners.
Assembly leaders want a similar 20 percent property tax credit, and a 25 percent credit for seniors and disabled residents.
Last week, the governor described Assembly Democrats as "skunks at the garden party" for not supporting his tax cut plan.
There has also been disagreement between the governor and the Legislature over the state's revenue growth. The Legislature's chief budget officer said the state has only reached half of the $1 billion that Gov. Christie's budget anticipated for this fiscal year.
Christie's response has been to ramp up his town hall meetings in an effort to sell his budget and tax plan to the public.