Platform Update

December 8, 2008

ACTION ITEMS

Platform Coalition Meeting: Economic Development Coalition members and others interested in these issues are invited to attend a meeting to discuss our current agenda. Members will be provided with an update on the action items and asked for their suggestions on moving forward with these initiatives in 2009. The meeting is scheduled for January 19 from 2 to 4 pm at the Verizon Center in Basking Ridge. If you plan to attend, please RSVP to Maryellen@njchamber.com by January 9, and you will receive a confirmation email with directions. Thank you to Verizon for hosting this meeting. 

Chamber Corporate Business Tax Reform Update: As reported in previous updates, the Chamber’s Tax Council drafted legislation to repeal some of the more onerous Corporate Business Tax (CBT) changes that were enacted in 2002 under the McGreevey Administration. The Chamber’s Tax Reform Package is designed to stimulate economic growth and foster a more positive business climate in New Jersey .

On November 24, Governor Corzine signed into law S-2130, which extends the net operating loss (NOL) carryover period from seven to twenty years. This legislation will bring this part of New Jersey ’s tax policies more in line with other states and improve our competitiveness. Reforming our business tax climate is vital to retaining businesses, attracting capital investment and growing good jobs.

Also on November 24, the Senate passed A-2722, which repeals two CBT provisions, the “throwout” rule and the “regular place of business” requirement. The throwout rule requires a New Jersey company, when calculating its corporate business tax liability, to include income earned in another state if that state chooses not to tax or is unable to tax the income. New Jersey is one of only two states that utilize this onerous provision. The regular place of business provision requires a multi-state corporation to maintain an office with at least one employee outside the state in order to allocate its income on the same basis as corporations with multiple business locations. New Jersey is the only state with this requirement. Our business tax policies impact the way that our state is perceived in the national and global marketplace, and reforming our business tax climate is important for business attraction and retention. This bill awaits final approval in the Assembly.

Economic Stimulus Legislation: Several Chamber supported bills that will help stimulate the economy and enhance our business incentive programs are moving through the legislature. These bills passed out of legislative committees or one or both houses last month.

The Senate and Assembly passed A-3294, which establishes a grant program in the New Jersey Economic Development Authority to provide businesses with grants of up to 7 percent of their capital investment costs and $3,000 for each new job created and retained for one year. This new incentive program is designed to stimulate capital investment and job creation. This bill awaits the Governor’s signature.

The Senate passed A-3377, which establishes the Main Street Business Assistance Program, and appropriates $50 million to the New Jersey Economic Development Authority to provide guarantees and loans to small- and mid-sized businesses and not-for-profit corporations on an expedited basis to stimulate the economy. This bill awaits final approval in the Assembly.

The Senate Economic Growth Committee released S-2379, which expands the eligibility and clarifies certain provisions of the Urban Transit Hub Tax Credit Program. The program as originally designed provides tax credits of up to 100 percent of qualified capital investments made in an urban transit hub. This bill amends the law by lowering the capital investment threshold from $75 million to $50 million, revising forfeiture requirements, allowing the tax credits to be carried forward for 20 years, and allowing unused credits to be sold. This bill has been referred to the Senate Budget and Appropriations Committee.

The Senate Economic Growth Committee passed S-2114, which expands the Business Employment Incentive Program (BEIP) to stimulate economic development and encourage job creation in certain urban areas. This bill eliminates the current limits on the amount of the grant for businesses located within designated urban centers, permits recipients to count independent contractors as part of their employment totals, extends eligibility to cooperative associations, and extends the grant term for recipients that agree to an additional retention period. Expanding the BEIP encourages investment and enables New Jersey to more effectively compete with other states. This bill has been referred to the Senate Budget and Appropriations Committee.

The Senate passed S-265, which allows employers that participate in the BEIP to elect to take an amount of their incentive payment as a credit against corporation business tax liability, whether computed as a regular corporation business tax liability or as an alternative minimum assessment. The employment incentive can be authorized for up to 10 years. This bill now goes to the Assembly for action.

The Assembly passed A-2720, which expands the number of businesses that qualify for a sales tax exemption at the point of sale on purchases within an Urban Enterprise Zone (UEZ). This change allows businesses with annual gross receipts of less than $10 million to obtain a sales tax exemption at the time of purchase. Currently businesses with more than $3 million in gross receipts are required to pay the sales tax and apply for a refund. This bill awaits approval in the Senate.

New Jersey Leads in New Economy: A recent study by the Information Technology and Innovation Foundation ranks New Jersey 5^th in its 2008 State New Economy Index. This study benchmarks how well states are transforming to today’s economies, which are global, knowledge dependent, entrepreneurial, innovative and embedded in information technology.  New Jersey ’s high ranking highlights these strengths.

Builders Suggest Recovery Plan: The New Jersey Builders Association sponsored an Economic and Business summit to discuss how the economic crisis has affected their industry and to offer solutions. Several developers presented their views on the extent that the recession is impacting the building industry.  

According to Jeffrey Otteau, president of Otteau Valuation Group, new home construction is down 20 percent and is expected to fall to 28 percent next year. He also expects another wave of subprime mortgage failures to hit toward the end of 2009. The National Home Builders Association reports that home sales are down 81 percent. Some industry experts and economists expect the situation to improve by 2011.  

A coalition of builder and developer organizations called Fix Housing First have crafted a proposal for a national stimulus bill that would offer subsidies of up to 22 percent of the purchase price for homebuyers, and expand the home-buyer tax credit to all home-buyers, not just first time buyers. This plan also proposes offering reduced mortgage rates through 2009.  

Proponents of the plan argue that such a program would provide an incentive for people to purchase homes, create jobs, open up the credit markets and generally help the economy. 

View news articles from the Star Ledger and The Times.

Click here for the previous update.

MaryEllen Peppard
Government Relations Manager
New Jersey Chamber of Commerce
216 West State Street
Trenton, NJ 08608
Phone: (609)989-7888 Ext. 125
Fax: (609)989-9696
Maryellen.Peppard@njchamber.com