Platform Update

October 17, 2008

ACTION ITEMS

New Chief of Office of Economic Growth: Earlier this week, Governor Corzine announced that Jerold Zaro will replace Gary Rose as chief of the Governor’s Office of Economic Growth. Zaro is the president and managing partner of Ansell Zaro Grimm & Aaron, and serves as the chairman of the law firm’s Commercial Real Estate and Commercial, Finance & Banking departments. For 12 years he was a commissioner of the New Jersey Highway Authority and recently completed a term as a commissioner of the New Jersey Sports & Exposition Authority. As chief, Zaro will be responsible for the overall strategy and coordination of state economic development activities that affect New Jersey businesses. The Chamber looks forward to working with Zaro in his new capacity. Angie McGuire served as the acting chief of the Office of Economic Growth since Rose’s departure in June.

Many Chamber Recommendations in Governor's Economic Plan: Governor Jon Corzine presented his economic stimulus package to members of the state legislature yesterday, which contained a combination of short- and long-term solutions to the current crisis. His proposal includes corporate business tax reforms, business incentive and regulatory changes, investment in green jobs, expedited infrastructure spending, emergency family assistance and programs to address the credit crunch.

Click here to read more.

Chamber Corporate Business Tax Reform Legislation Moving Through Legislature: As reported in previous updates, the Chamber Tax Council drafted legislation to repeal some of the more onerous Corporate Business Tax (CBT) changes that were enacted in 2002. The Chamber’s Tax Reform Package is designed to stimulate economic growth and foster a positive business climate in New Jersey. Several of these tax reform measures passed out of Assembly and Senate Committees on Oct. 6.

The Assembly Budget and the Senate Budget and Appropriations Committees released A-3124/S-2130, which changes aspects of the CBT regarding Net Operating Loss (NOL) provisions. This legislation extends the NOL carryover period from seven to twenty years. This legislation will bring New Jersey’s tax policies more in line with other states and make us more competitive. Reforming our business tax climate is vital to retaining businesses, attracting capital investment and growing good jobs.

The Assembly Commerce and Economic Development Committee released A-2722, which repeals the “throwout” rule, a CBT provision that 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. Our business tax policies impact the way that our state is perceived in the national and global marketplace. Reform could lead to job growth and expansion.

This Committee also released A-2626, which provides a single sales factor corporate business tax allocation formula for manufacturers. The Chamber strongly supports implementing a single sales factor formula for New Jersey businesses, however, we feel that in its current form, this bill does not effectively provide a benefit for New Jersey’s “new economy” high-growth jobs, such as those in the telecommunications, pharmaceutical and services sectors. The Chamber asked the Committee that this bill be expanded to include all industries, which would provide an incentive for our state’s high-growth businesses to create jobs and expand in New Jersey.

Governor Corzine endorsed several components of our package by including them in his economic stimulus plan.

View the Chamber CBT Reform Package.

Business Incentive Program Enhancements: Also on Oct. 6, the Legislature met to hear testimony and vote on bills that would impact the economy in a positive way during the current economic crisis. Several bills advocated by the Chamber that would expand our state’s business incentive programs were reported out of Committee.

The Assembly Budget Committee released A-2720, which restores the point of sale sales tax exemption on purchases by businesses located in Urban Enterprise Zones (UEZs). This legislation repeals the requirement enacted last year that requires a business that qualifies for a sales tax exemption to pay the sales tax and then apply for a rebate, rather than exempting the sale from tax at the point of sale. Since the rebate program was implemented, a significant number of businesses have dropped out of the UEZ program, citing the significant administrative burdens and high costs of complying with this new law.

The Assembly Commerce and Economic Development Committee released A-2997, which amends the Business Employment Incentive Program (BEIP) to stimulate economic development and encourage job creation in certain designated urban areas. This bill eliminates the current limits on the amount of the grant for businesses located within designated urban centers, permits BEIP 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 job growth and enables New Jersey to more effectively compete with other states.

This Committee also released A-3294, which amends the Business Retention and Relocation Assistance Grant (BRRAG) to expand the benefits to additional businesses. This bill extends eligibility to companies that pose a flight risk and it does not require them to relocate to another in state facility.

Additionally, the bill increases the one time $1,500 tax credit per retained job to $4,000 per job if there is a minimum of 2,000 retained jobs that are relocated to a designated urban center. Enhancing our incentive programs will enable us to remain competitive with our neighboring states.

Permit Extension Act Signed Into Law: On Sept. 6, Governor Corzine signed into law the Permit Extension Act of 2008, legislation advocated for by the Chamber. This law extends state, county and municipal permits issued after January 1, 2007 until July 1, 2010, with up to an additional six months phase-in period. Existing economic conditions make it difficult for developers to obtain financing, and in some cases they are forced to delay scheduled projects that have already been approved, which results in some of these permit approvals expiring before the projects are completed. Given that the permit application process is extremely time consuming and expensive, it makes sense to allow additional time for stalled projects to be completed.

Caren Franzini Addresses Chamber Members: At a recent Chamber event, New Jersey Economic Development Authority (NJEDA) CEO Caren Franzini provided an overview of the reorganization of the state’s economic development agencies and described the programs and services that NJEDA provides to the business community. Franzini noted that the consolidation of the Commerce Commission into the NJEDA was designed to streamline the state’s economic development efforts so that businesses only need to go to one government agency for information or assistance. Businesses seeking financial incentives or assistance can now apply online through a single application, which can be accessed at www.njeda.com.

NJEDA has created a new Business Attraction and Retention Team, whose staff will act as a single point of contact for businesses requiring assistance. This team will reach out to businesses within targeted industries to retain and attract businesses. International trade has been integrated into the NJEDA, which will work with New Jersey's global trading partners to increase foreign direct investment and provide exporting assistance to New Jersey businesses. Additionally, the NJEDA will more closely partner with the business community to promote New Jersey and ensure that employers are aware of the services and products that NJEDA has to offer them.

Migration Study: A recent study by the Policy Research Institute at Princeton University shows that the people leaving New Jersey are mostly lower income, and are either unemployed or out of the labor force. The high cost of living is one of the primary factors that results in the out-migration of residents. Those that leave New Jersey tend to move to states with lower property values and lower property taxes. The report also shows that there is a modest net inflow of individuals with PhDs moving into New Jersey. View the study.

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