The Legislature on June 25 approved an austerity budget that cuts spending by $4 billion but also continues a 4 percent surcharge on corporate tax rates and raises taxes on incomes above $400,000. The budget won approval six days before the constitutional deadline. Governor Corzine is expected to sign the measure quickly.

The approximately $29 billion budget would cut spending by 12 percent, which is a step in the right direction, but raises a number of taxes, which NJBIA opposes. On the tax side, the budget continues a 4 percent surcharge on corporate income taxes that was supposed to expire this year, costing employers $80 million; raises tax rates on income above $400,000; increases the cigarette tax by 12.5 cents per pack and hikes alcohol and wine taxes by 25 percent. The legislature had also planned to increase taxes on health insurance premiums by 135 percent, but a last-minute windfall of revenues from the tax amnesty program allowed them to dramatically scale back the tax. NJBIA opposed the tax increase because it would have increased already skyrocketing employer health insurance costs. The tax amnesty program, which ended June 15, generated more than $600 million in revenue, three times the amount anticipated.

Despite the dire revenue picture, lawmakers included an important $120 million appropriation to shore up the Unemployment Insurance (UI) fund to avoid another $350 million payroll tax increase on employers (about $87 per employee). Payroll taxes still will automatically rise by $350 million on July 1, as the fund's balance is too low to pay increased unemployment claims. But without the State's action, New Jersey employers would have faced a total increase of $700 million or 40 percent. For more information, contact Art Maurice.

2. Legislature Approves State Stimulus Bill that Would Spur Economic Development

A new economic stimulus bill that would provide tax and fee reductions and financial incentives to stimulate large-scale, private-sector economic development projects was approved by the Legislature on June 25. The bill reforms several existing economic development programs by:

• establishing a moratorium on the collection of the 2.5 percent nonresidential development fee by the NJ Council on Affordable Housing (COAH).
• creating a new tax increment financing program to provide rebates for some of the taxes paid by the development project;
• reforming and expanding the Technology Business Tax Certificate Transfer and Urban Transit Hub Tax Credit (UTHTC) programs to make it easier for businesses to qualify;
• allowing for public-private investment partnerships to build facilities at the State's colleges and universities; and

NJBIA supports the measure. As currently structured, these programs are too complex and have too many barriers for businesses to use them. Forty-eight states currently have functioning tax increment financing programs, but New Jersey’s program has attracted only one developer in ten years. Similarly, because its requirements are too onerous, the Urban Transit Hub program has not generated any applicants. For more information, contact Art Maurice.

3. Revised ‘Green Building’ Bill Sent to Governor

Legislation that would incorporate "green building" requirements into New Jersey’s Uniform Construction Code received final legislative approval on June 25.

The bill, S-702 (Smith)/ A-1629 (McKeon, Chivukula) , would require the Commissioner of Community Affairs to develop an energy building subcode for the State based on existing federal models. The Legislature adopted NJBIA-backed amendments to link New Jersey’s requirements to a national construction code, avoiding costly, New Jersey-only regulations.

Green building techniques reduce a building’s impact on the environment by conserving energy and water and using environmentally friendly construction materials. For example, green-building designs harness natural sunlight for heating or capture stormwater runoff from parking lots. For more information, contact Sara Bluhm.

4. Legislature Approves Prevailing Wage for Energy Projects

Businesses that undertake already expensive energy efficiency or renewable energy projects would be forced to pay higher union-scale prevailing wages to contractors under a bill that received final legislative approval June 25.

A-3372 (Barnes, Diegnan)/S-2340 (Sweeney, Buono) would require businesses to pay prevailing wage on any project receiving more than $11,892 in financial assistance from the Board of Public Utilities (BPU), including rebates, tax abatements or loans. Projects ranging from replacement of heating and cooling equipment to the installation of solar panels would be covered.

NJBIA opposes the bill because it would unnecessarily increase the cost of energy conservation and renewable energy projects promoted by the State. According to the Mid-Atlantic Solar Energy Industries Association, the prevailing wage would add 25 percent to labor costs for installing a solar energy system. The higher cost would outweigh the benefits of many of the rebates and tax incentives for renewable energy and energy efficiency projects, ensuring that fewer companies will undertake such expensive projects in these tough economic times. For more information, contact Sara Bluhm.

5. Paid Family Leave Takes Effect July 1, All Businesses Affected

Employees at all businesses, regardless of size, will be entitled to six weeks of paid time off to be with a sick family member or newborn as New Jersey's paid family leave law goes into effect. Unlike existing unpaid leave laws, there is no small business exemption. If your business is covered under the Unemployment Compensation Law, then your employees are entitled to paid family leave even if your business has only two to 50 employees. For more information, visit www.njbia.org/paidleave. NJBIA is also holding a seminar on complying with the new paid family leave law on Friday, July 24, from 8:30 a.m. to 12:45 a.m. at Forsgate Country Club, Monroe Township (Exit 8A, NJ Turnpike). Contact Katie Wittkamp at 609-393-7707, ext. 239.

6. Stimulate Your Bottom Line with Government Contracts, July 7

Tens of millions of dollars in contracting and financing opportunities are being made available to New Jersey businesses under the federal stimulus program and through State and local governments. At this seminar, July 7 at the Forsgate Country Club in Monroe Township, you will find out who to contact and how to access contracts, projects and funds being made available by federal, State and local governments.

Cost to attend is $129 per person for NJBIA members and $169 for nonmembers. Register online now, or for more information, contact Katie Wittkamp at 609-393-7707, ext. 239. Contact Sherry Esteves at ext. 219 to become a high-visibility sponsor.