Platform Update

January 2009

ACTION ITEMS

Corporate Business Tax Reform Legislation Signed into Law: I am pleased to report that many of the Corporate Business Tax reform initiatives, originally drafted by the State Chamber’s Tax Council, have become law. This Tax Reform Package, designed to stimulate economic growth and foster a more positive business climate in New Jersey , is especially important in these difficult economic times.

On Nov. 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.

On Dec. 19, Governor Corzine signed 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 utilized this onerous provision. The regular place of business provision requires a multi-state corporation to maintain a physical 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 was 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.  You can view video of these bill signings here.  

Economic Development Legislation Signed into Law: Several Chamber supported bills that will help stimulate the economy were given final legislative approval and signed by Governor Corzine last month.

On Dec. 9, Governor Corzine signed 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. Businesses can apply online here. View program details here.

On Dec. 16, Governor Corzine signed 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. View program details here.

On Dec. 17, Governor Corzine signed 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.

State Budget Update: Recent New Jersey revenue figures show that collections through the first five months of the 2009 fiscal year are $459 million below projections, and the shortfall is estimated to grow to $2.1 billion. Governor Corzine has proposed cuts to make up the current year deficit, including $812 million from state departments and agencies. A list of specific proposed spending reductions can be found here.     

The Governor also proposes filling the gap using $275 million from the state’s surplus, $500 million from the Long Term Debt Reduction Fund, $208 million in unspent funds and by freezing state union employee salaries. The Administration also anticipates receiving $300 million from a federal stimulus package.   Governor Corzine will present his Budget Address for fiscal year 2010 on March 10, several weeks later than originally scheduled. The shortfall for fiscal 2010, which begins on July 1, 2009, could be as high as $5 billion. We will continue to monitor the state’s fiscal situation and the impact the proposed budget will have on the business community. We also welcome your input as we move through the coming months.

According to the Center on Budget and Policy Priorities, at least 44 states are faced with budget shortfalls this fiscal year or next. Combined budget gaps for the remainder of this fiscal year and fiscal years 2010 and 2011 are estimated to total more than $350 billion. Pennsylvania is facing a shortfall of at least $1.6 billion, which Governor Edward Rendell plans to close through spending cuts, rainy-day reserves and anticipated federal stimulus aid. New York Governor David Paterson recently introduced his 2009-10 budget proposal, which attempts to close a projected $15 billion two-year budget gap through new or increased taxes and fees. The proposals expected to raise the most revenue include the elimination of the sales tax exemption on clothing ($462 million), increased liabilities of electric, gas, water and telephone utilities ($651 million), reduced tax incentives offered through the state’s Empire Zone program ($272 million), a 18 percent soft drink tax ($404 million), and a sales tax on cable, direct-to-home satellite and satellite radio service ($136 million). 

C-Suite Survey: Members of the New Jersey business, academic and legislative communities gathered last month for the 2nd Annual New Jersey Economic Policy Forum. Centering on an ambitious, twice-yearly C-Suite Survey of top-level executives in New Jersey, the program and discussion featured the latest survey results and two compelling panel discussions highlighting the attitudes, challenges and solutions among organizations and businesses based in New Jersey. Governor Jon Corzine served as keynote speaker, and Jerry Zaro, Chief of the Governor's Office of Economic Growth, spoke at the luncheon. The Chamber, along with real estate services provider Cushman & Wakefield, Inc. and several partner trade associations, created the Forum last year to bring together key stakeholders to discuss economic challenges and opportunities facing the state.

The initial C-Suite survey was conducted in the fall of 2007 by The Edward J. Bloustein School of Planning and Public Policy at Rutgers University . The survey, to be administered every six months, asks executives a variety of questions associated with the state's economy and business climate. More than 110 executives responded to the fall 2009 survey.  The survey results indicated that accessibility, location, workforce, education and access to health care were among the key advantages of doing business in New Jersey . Respondents cited cost of housing, cost of living, tax levels, and local and state regulations as disadvantages of doing business in New Jersey . View the survey results here.  

EDA Provided $540 million to Assist Business in 2008: The New Jersey Economic Development Authority (EDA) provided nearly $540 million in financing assistance, incentives and tax credits to support business growth and job creation in New Jersey. This assistance is supporting new public/private investment of more than $1.6 billion in New Jersey ’s economy that is expected to result in the creation of almost 6,700 new, full-time jobs and over 17,000 construction jobs. This past year, EDA created several new financing products and expanded existing programs to support New Jersey businesses. View EDA’s product list here.

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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