Update, posted November 7, 2016.

A-4189 was approved by the Assembly Commerce and Economic Development Committee on October 6.   This was then 2nd referenced to the Assembly Appropriations Committee, who in turn approved the bill on October 27.  It now awaits a floor vote by the General Assembly.

Senators Jeff Van Drew and Shirley Turner sponsor the Senate companion, S-2670.    This bill awaits consideration by the Senate Economic Growth Committee.

End update. 

The League was a strong supporter of A-2576, which would have extended the Urban Enterprise Zone (UEZ) designation for participating municipalities for another 10 years, so that business in those communities could continue to benefit from the economic incentives provided under the long-running program.  The extension recognized the setbacks experienced by the qualifying businesses, due to the national recession and our State’s slow recovery.

The bill was conditionally vetoed by the Governor, who criticized the UEZ program as ineffective and costly to the State; and, along with his conditional veto, the Governor rejected any extension of UEZ redevelopment incentives. Instead, he asked the Legislature to direct the Commissioner of the Department of Community Affairs to conduct a study of the UEZ program “… which shall include, without limitation, an assessment of whether an alternative, location-based program to assist fiscally distressed municipalities is appropriate, and, if so, recommendations for the parameters of such a program …”

Respecting the Governor’s desire for a comprehensive analysis of the program, a pair of bills have been introduced as a compromise. The new legislation, A-4135 and A-4189, accepts the Governor’s recommendation regarding a DCA study of the program and research into alternatives. However, the bill provides a two year extension to the five UEZs that are set to expire at the end of this year.

The UEZ Program – first created in 1983 – offers incentives to participating businesses, designed to encourage business growth and stimulate local economies. Approximately 6,800 certified UEZ businesses participate and benefit from the advantages of the UEZ program statewide. These include a number of tax and financial incentives, including tax credits to hire local workers. The program authorizes qualifying retail businesses in the UEZs to charge and collect the State’s sales and use tax (sales tax) at one-half of the normal rate.

Those incentives allow businesses to attract customers to, and create employment opportunities in, economically distressed municipalities. UEZ designation is a vital tool in the tool kit of local leaders, working to bring their communities back from decades of decline, caused by housing and transportation policy decisions over which they had no control.

We commend the sponsors and urge approval of A-4135/A-4189.

Contact:  Jon Moran, Sr. Legislative Analyst, 609-695-3481 x121, jmoran@njslom.org.