Bill Text: NJ S761 | 2010-2011 | Regular Session | Introduced
Bill Title: Revises Business Employment Incentive Program to spur economic growth.
Spectrum: Slight Partisan Bill (Republican 2-1)
Status: (Introduced - Dead) 2010-12-13 - Motion To Table (23-16) (Buono) [S761 Detail]
Download: New_Jersey-2010-S761-Introduced.html
STATE OF NEW JERSEY
214th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2010 SESSION
Sponsored by:
Senator JENNIFER BECK
District 12 (Mercer and Monmouth)
Senator JOSEPH M. KYRILLOS, JR.
District 13 (Middlesex and Monmouth)
SYNOPSIS
Revises Business Employment Incentive Program to spur economic growth.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel
An Act revising the Business Employment Incentive Program to spur economic growth, and supplementing Title 34 of the Revised Statues and repealing parts of statutory law.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. (New section) Sections 1 through 14 of this act shall be known and may be cited as the "Business Employment Incentive Program Act of 2009."
2. (New section) All references in any law, order, rule, regulation, contract, document, judicial or administrative, or otherwise, to the "Business Employment Incentive Program Act", P.L.1996, c.26, s.1 (C.34:1B-124 et seq.), shall mean the "Business Employment Incentive Program Act of 2009", P.L. , c. (C. ) (pending before the Legislature as this bill).
3. (New section) As used in this act, unless a different meaning clearly appears from the context:
"Authority" means the New Jersey Economic Development Authority.
"Business employment incentive agreement" or "agreement" means the grant agreement between a business proposing to create new jobs in this State and the authority which establishes the terms of the employment incentive grant for that business as provided in section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Employment incentive" means the amount of a grant claimed under this act according to a business employment incentive agreement, expressed as a percentage of the total amount of personal income taxes withheld by the business during a taxable year for new employees.
"Full‑time employee" means an individual who is employed for at least 35 hours a week, or who renders any other standard of service generally accepted by custom or practice as full‑time employment.
"New employee" means a full‑time employee first employed by a business in the project that is the subject of a business employment incentive agreement after the business enters into that agreement with the authority. An out-of-state resident, or a State resident whose job is located outside of New Jersey prior to the execution of the agreement, shall be classified as a new employee when the employee's job is relocated to New Jersey and as a consequence the employee's wages are subject to income tax withholding as provided under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq. A State resident shall not be classified as a "new employee" unless his wages, prior to the relocation, were subject to income taxes imposed by the state or municipality in which the job was previously located. "New employee" may also include an employee rehired or called back from a lay‑off to work in a new facility or on a new product or service established or produced by the business after entering into the agreement. "New employee" shall not include any employee who was employed in New Jersey by the applicant or by a related person as defined in section 2 of P.L.1993, c.170 (C.54:10A-5.5) and whose employment was shifted to the business after it entered into the agreement, unless that employee was replaced at substantially the same terms and conditions of employment by another newly‑hired employee at the transferred employee's former place of employment. In addition, "new employee" does not include a child, grandchild, parent, or spouse, other than a legally separated spouse, of any individual who is an employee of the business and who has direct or indirect ownership interest of at least 15 percent of the profits, capital, or value of the business, as that interest is determined under appropriate provisions of the federal Internal Revenue Code of 1986.
"New income tax revenue" means the total amount withheld by the business during the taxable year from the wages of new employees pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1‑1, as certified by the Director of the Division of Taxation.
"Percentage" means a proportion per hundred established in a business employment incentive agreement that shall range between 10 percent and 80 percent.
"Program" means the Business Employment Incentive Program established pursuant to this act.
"Targeted area" means a qualifying municipality as defined in section 1 of P.L.1978, c.14 (C.52:27D‑178).
4. (New section) There is established the Business Employment Incentive Program. The authority may make grants under the program to foster job creation in this State. The grant shall be claimed for the taxable years specified in the agreement. The amount of the grant shall equal the new income tax revenue for the taxable year multiplied by the percentage specified in the agreement.
5. (New section) A business or potential business that proposes a project to create new jobs in this State may apply to the authority to enter into an agreement for a grant under this act. The authority shall prescribe the form of the application. After receipt of an application, the authority may enter into an agreement with the business for a grant if it determines that:
a. The proposed project will create positions for at least 75 new employees in New Jersey within the first two complete taxable years or the proposed project will create positions for at least 25 new employees in a targeted area within the first two complete taxable years;
b. The project is economically sound and will benefit the people of New Jersey by increasing opportunities for employment and by strengthening New Jersey's economy; and
c. The authority's project analysis shows that the receipt of the employment incentives will be a major factor in the business's decision to undertake the project.
6. (New section) The business employment incentive agreement shall include:
a. A detailed description of the proposed project;
b. The length of the grant, which shall not exceed 10 years, and the first taxable year for which the grant may be claimed;
c. A requirement that the applicant shall maintain the project at a location in New Jersey for at least 1.5 times the length of the grant;
d. The percentage;
e. A specified method for determining how many new employees are employed during a taxable year;
f. A requirement that the business shall report annually to the authority the number of new employees, the new income tax revenue withheld in connection with those new employees, and any other information the authority deems necessary.
7. (New section) For the purposes of this act, a business may include a sole proprietorship, a partnership, a corporation that has made an election under Subchapter S of Chapter One of Subtitle A of the federal Internal Revenue Code of 1986, or any other business entity through which income flows as a distributive share to its owners. A grant received under this act by a partnership, Subchapter S Corporation, or other such business entity shall be apportioned among the persons to whom the income or profit of the partnership, Subchapter S Corporation, or other entity is distributed, in the same proportions as those in which the income or profit is distributed.
8. (New section) Projects that consist solely of point-of-final-purchase retail facilities are not eligible for a grant under this act. If a project consists of both point-of‑final-purchase retail facilities and non-retail facilities, only that portion of the project consisting of the non‑retail facilities is eligible for a grant and only the new income tax revenue of the non‑retail facilities shall be considered when computing the amount of the grant. If a warehouse facility is part of a point-of-final-purchase retail facility and supplies only that facility, the warehouse facility is not eligible for a grant. Catalog distribution centers are not considered point-of-final-purchase retail facilities for the purposes of this act, and are eligible for grants.
9. (New section) A landlord that proposes a project to create new jobs in this State may apply to the authority to enter into an agreement for a grant under this act. The authority shall prescribe the form of the application. After receipt of the application, the authority may enter into an agreement with the landlord for a grant if it determines that:
a. The tenants in the proposed project will in the aggregate create positions for at least 75 new employees in New Jersey within the first two complete taxable years or the tenants in the proposed project will create positions for at least 25 new employees in a targeted area within the first two complete taxable years;
b. The project is economically sound and will benefit the people of New Jersey by increasing opportunities for employment and by strengthening New Jersey's economy;
c. The authority's project analysis shows that the receipt of business employment incentives will be a major factor in the decision of the landlord and tenant to undertake the project;
d. The tenants have agreed to assign to the landlord any claim of right that the tenant may have to a grant; and
e. The tenants have agreed to cooperate with the landlord in annually supplying information to the authority concerning the number of new employees, the new income tax revenue withheld in connection with those new employees, and any other information that the authority may require to perform its duties under this act.
10. (New section) Every business which is awarded a grant under this act shall submit a copy of its New Jersey tax returns, appropriate to its form of ownership, showing business income or activity for each taxable year a grant is claimed to the authority. Failure to submit a copy of these documents may result in the suspension or termination of the business's grant.
11. (New section) Every business that receives approval on its grant application will be required to maintain operations at the project location for at least 1.5 times the length of the grant. The grant agreement shall contain assurances that provide for the recapture of grant funds if a business does not remain at the project site for the required length of time. In determining the portion of the grant to be recaptured, the authority shall consider the effect of market conditions on the project and whether the business continues to maintain other operations in this State.
12. (New section) If a business fails to meet or comply with any condition or requirement set forth in an agreement, the authority may amend the agreement to reduce the percentage or term of the grant agreement. The reduction of the percentage or term shall take effect in the taxable year immediately following the taxable year in which the authority amends the agreement. If a business fails to maintain employment at the levels stipulated in the agreement, or otherwise fails to comply with any condition of the agreement for any two consecutive taxable years, the authority may terminate the agreement.
13. (New section) The authority, after consultation with the Division of Taxation in the Department of the Treasury, shall, in accordance with the "Administrative Procedure Act," P.L. 1968, c. 410 (C.52:14B‑1 et seq.), adopt rules necessary to implement the provisions of the Business Employment Incentive Program not related to the collection or determination of taxes and tax withholding. The rules shall provide for the recipients of employment incentive grants to be charged an initial application fee, and ongoing service fees, to cover the administrative costs related to the program. The Director of the Division of Taxation is authorized to promulgate those rules necessary to effectuate the tax related provisions of the Business Employment Incentive Program.
14. (New section) The authority shall submit a report on the program to the Governor, President of the Senate, and Speaker of the Assembly on or before October 31 of each year in accordance with section 2 of P.L.1991, c.164 (C.52:14-19.1). The report shall include information on the number of agreements entered into during the preceding fiscal year, a description of the project under each agreement, the number of jobs created, new income tax revenue received, amounts awarded as grants and an update on the status of projects under agreement before the preceding fiscal year.
15. The following sections are repealed:
Section 1 of P.L.1996, c.26 (C.34:1B-124);
Section 2 of P.L.1996, c.26 (C.34:1B-125);
Section 3 of P.L.1996, c.26 (C.34:1B-126);
Section 4 of P.L.1996, c.26 (C.34:1B-127);
Section 5 of P.L.1996, c.26 (C.34:1B-128);
Section 6 of P.L.1996, c.26 (C.34:1B-129);
Section 7 of P.L.1996, c.26 (C.34:1B-130);
Section 8 of P.L.1996, c.26 (C.34:1B-131);
Section 9 of P.L.1996, c.26 (C.34:1B-132);
Section 10 of P.L.1996, c.26 (C.34:1B-133);
Section 11 of P.L.1996, c.26 (C.34:1B-134);
Section 12 of P.L.1996, c.26 (C.34:1B-135);
Section 13 of P.L.1996, c.26 (C.34:1B-136);
Section 14 of P.L.1996, c.26 (C.34:1B-137);
Section 15 of P.L.1996, c.26 (C.34:1B-138);
Section 17 of P.L.1996, c.26 (C.34:1B-139);
Section 9 of P.L.2003, c.166 (C.34:1B-139.1);
Section 10 of P.L.2003, c.166 (C.34:1B-139.2); and
Section 11 of P.L.2003, c.166 (C.34:1B-139.3).
16. A business employment incentive agreement entered into before the effective date of P.L. , c. (C. et seq.) (pending before the Legislature as this bill) shall remain in effect until the expiration date of the business employment incentive agreement, notwithstanding the provisions of P.L. , c. (C. et seq.) (pending before the Legislature as this bill).
17. This act shall take effect immediately.
STATEMENT
This bill revises the Business Employment Incentive Program (BEIP) to jumpstart New Jersey's stalled economy. To that end, the legislation scuttles the growth-stunting limitations and bureaucratic hassles that have been frivolously added to the program over the years. The reinvigorated BEIP is to take on the form of the program envisioned by the legislation that served as the basis for BEIP's creation, Assembly Bill No. 3210 of 1995.
Under the legislation, businesses receive employment incentive grants equal to a percentage, between 10 percent and 80 percent, of the total amount of State income taxes withheld by the business during a calendar year for new employees hired. Most importantly, the amount of the grant is no longer capped at $50,000 per new employee over the term of the agreement, an ill-considered limitation that was added in 2003. In addition, the bill rescinds the ability of the New Jersey Economic Development Authority to bond to pay for BEIP grants, eliminates the arbitrary preferred treatment of a subset of businesses, and removes several administrative limitations that unduly burden businesses seeking to create jobs in partnership with the State.
