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From the NJ State Chamber of Commerce

October 7, 2008 - Special Legislative Session Addresses Economic Crisis

The New Jersey Legislature met yesterday to hear testimony and vote on bills that would impact the economy in a positive way during the current economic crisis. The chamber testified before various committees in favor of tax reform measures that would make New Jersey more competitive. A year ago, the State Chamber Tax Council drafted a Corporate Business Tax (CBT) Reform Package that contained three bills - with eight provisions - that would reform or repeal many of the onerous CBT laws enacted in 2002. Bills from the package heard and passed yesterday include the Net Operating Loss and the Throwout bills.

The following bills were part of yesterday's special economic agenda:


Assembly Commerce and Economic Development Committee Corporate Business Tax Reform - A-2626 (Vas/D-19): Committee passed. Provides a single sales factor corporate business tax allocation formula for manufacturers, which changes the corporation business tax formula used to determine the portion of income subject to New Jersey tax from a three factor formula (payroll, property and sales) to a single formula based on sales. Implementing a single sales factor formula would encourage capital investment and job creation in New Jersey. The Chamber supports expanding this bill to extend a single sales factor formula for all industries, not just manufacturing. This expansion would provide an incentive for our state's high-growth "new economy" businesses to create jobs and expand in New Jersey.

Assembly Budget Committee UEZ Sales Tax Reform - A-2720 (Vas/D-19; Burzichelli/D-3; Pou/D-35): Committee passed. Repeals the point of sale sales tax exemption on purchases by businesses located in Urban Enterprise Zones (UEZs). This bill 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.

Assembly Commerce and Economic Development Committee Repeal of Throwout Rule - A-2722 (Vas/D-19; Greenwald/D-6; Coutinho/D-29): Committees passed. Repeals the "throwout" rule, a CBT provision which 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 bill is part of the State Chamber Corporate Business Tax Reform Package.

Assembly Commerce and Economic Development Committee BEIP Expansion - A-2997 (Vas/D-19; Greenwald/D-6; Coutinho/D-29): (Vas/D-19; Coutinho/D-29): Committee passed. 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.

Assembly Budget Committee and Senate Budget and Appropriations Committee Extension of NOL Carryover Period - A-3124 and S-2130 (Geenwald/D-6; McKeon/D-27; Vas/D-19; Codey/D-27; Buono/D-18): Committees passed. Extends the net operating loss (NOL) carryover period from seven to 20 years. This legislation will bring New Jersey's tax policies more in line with others states and make us more competitive. Reforming our business tax climate is vital to retaining businesses, attracting capital investment and growing good jobs. This bill is part of the State Chamber Corporate Business Tax Reform Package.

Assembly Commerce and Economic Development Committee BRRAG Expansion - A-3294 (Milan/D-1): Committee passed. Amends the Business Retention and Relocation Assistance Grant (BRRAG) to expand the benefits to additional businesses. This bill extends eligibility to businesses that pose a flight risk due to factors such as lease expirations, competing proposals or competitive cost advantages in other states, without requiring these businesses to relocate to another in state facility, and increases the one time $1,500 tax credit per retained job to $4,000 per job if there are 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.

Other bills with recent legislative action include the following:


Senate Budget and Appropriations Committee Energy Exemptions - S-241/394/710/1098 (Adler/D-6; Bateman/R-16; Smith/D-17; Haines/R-8; McKeon/D-27; Diegnan/D-18; Rudder/R-8; Fisher/D-3; Gusciora/D-15; Greenstein/D-14): Governor signed into law on October 1. Establishes a property tax exemption for renewable energy systems that are part of a residential, commercial, industrial, or mixed use building and produces renewable energy onsite to provide all or a portion of the electrical, heating, cooling, or general energy needs of that building. Renewable energy is defined as electric energy produced from solar technologies, wind energy, fuel cells, geothermal technologies, wave or tidal action, methane gas from landfills, a resource recovery facility, a hydropower facility or a biomass facility, or energy produced from solar thermal or geothermal technologies. The bill also provides tax exemptions attributable to energy cost saving measures that reduce consumption of water and energy.

Assembly Telecommunications and Utilities Committee and Assembly Environment and Solid Waste Committee Energy Incentives - A-843 (Chivukula/D-17; Karrow/D-23): Committee passed. Requires the Board of Public Utilities to provide equal opportunity for prospective business applicants to apply for incentives for funding under programs that the BPU determines shall be funded by the societal benefits charge. The State Chamber supports incentives for businesses and residents as a way to encourage and promote alternative sources of energy.

Assembly Telecommunications and Utilities Committee and Assembly Environment and Solid Waste Committee Wind and Solar Energy in Industrial Zones - A-2550 (Lampitt/D-6; Chivukula/D-17; Wagner/D-38): Committee passed. Permits the location of certain renewable energy facilities in areas zoned for industrial use. The bill defines "renewable energy facility" as a facility that engages in the production of electric energy from solar technologies, photovoltaic technologies, or wind energy. Specifically, this legislation provides that a renewable energy facility on a parcel or parcels of land comprising 20 or more contiguous acres would be a permitted use within every industrial district of a municipality.


Senate Budget and Appropriations Committee Protecting the UI Fund - SCR-60 (Sweeney/D-3; Kean, T./R-21): Committee passed. The proposed constitutional amendment prohibits the State from balancing the State budget by diverting money from employee benefit funds, such as the Unemployment Insurance Trust Fund (UI). This measure would place the constitutional question on the November general election ballot and, if approved by voters, would take effect Jan. 1, 2009. The State Chamber believes this legislation will help ensure that these dedicated funds are protected and used only for the purposes for which they were created.

Worker Compensation Reform - S-1915 (Sarlo/D-36; Cunningham/D-31; Cohen/D-20; Egan/D-17; Giblin/D-34); S-1916 (Sarlo/D-36; Pennacchio/R-26; Egan/D-17; Cohen/D-20; Giblin/D-34; Barnes/D-18): Governor Corzine signed into law on October 1. These bills take needed steps towards reforming the state's worker compensation system. Specifically the bills require employers to provide proof of current workers' compensation coverage under certain circumstances and clarifies the procedure of worker claims when the worker is in need of emergent medical care.