NJ Business Matters: The Blog of the CIANJ

Increasing Costs, And Jeopardizing New Jobs

The General Assembly today passed S-2247, requiring companies that take advantage of BEIP grants to pay the prevailing union wage on certain projects.

Business Employment Incentive Program (BEIP) grants work to entice companies to expand or locate within New Jersey by paying a portion of the company's income taxes provided they generate at least 25 new jobs. To date, the program has helped create 70,000 new jobs and nearly $12 billion in new investment.

It's the state's most successful job creation program ever, built on the principle of reducing costs in order to get companies to expand or locate in New Jersey.

Prevailing wage requirements increase construction costs by 10-25%.

So now, a string attached to accepting a grant which reduces the cost of doing business will be to increase your cost of doing business. The bill also requires a landlord to pay the prevailing wage if a BEIP recipient occupies at least 55% of their building - even for work done elsewhere on the property.

Now, a quasi-related third party would be able to jeopardize your incentive grant. As we said in our committee testimony, it would border on irresponsibility for a company to accept a grant under those circumstances.

The final tally in the Assembly it was 53-24. We'll post the votes of the Assembly when they become available on-line The votes of individual legislators are pasted below. The legislation appears to be headed for the Governor's desk. A "NO" vote is consistent with the CIANJ's position.

	Albano, Nelson T. - Yes	Barnes, Peter J., III - Yes	Baroni, Bill - Yes
	Bateman, Christopher - No	Beck, Jennifer - No	Biondi, Peter J. - No
	Blee, Francis J. - Yes	Bodine, Francis L. - Not Voting	Bramnick, Jon M. - No
	Burzichelli, John J. - Yes	Caraballo, Wilfredo - Yes	Carroll, Michael Patrick - No
	Chatzidakis, Larry - Not Voting	Chivukula, Upendra J. - Yes	Cohen, Neil M. - Yes
	Conaway, Herb, M.D. - Yes	Conners, Jack - Yes	Connors, Christopher J. - No
	Corodemus, Steve - No	Cruz-Perez, Nilsa - Yes	Cryan, Joseph - Yes
	Dancer, Ronald S. - Yes	DeCroce, Alex - No	Diegnan, Patrick J., Jr. - Yes
	Doherty, Michael J. - No	Egan, Joseph V. - Yes	Epps, Charles T., Jr. - Yes
	Evans, Elease - Yes	Fisher, Douglas H. - Yes	Giblin, Thomas P. - Yes
	Gordon, Robert M. - Yes	Green, Jerry - Yes	Greenstein, Linda R. - Yes
	Greenwald, Louis D. - Yes	Gregg, Guy R. - No	Gusciora, Reed - Yes
	Handlin, Amy H. - No	Holzapfel, James W. - No	Jasey, Mila M. - Yes
	Johnson, Gordon M. - Yes	Karrow, Marcia A. - No	Kean, Sean T. - Yes
	Lampitt, Pamela R. - Yes	Malone, Joseph R., III - Yes	Manzo, Louis M. - Yes
	Mayer, David R. - Yes	McHose, Alison Littell - No	McKeon, John F. - Yes
	Merkt, Richard A. - No	Moriarty, Paul D. - Yes	Munoz, Eric - No
	O'Toole, Kevin J. - No	Oliver, Sheila Y. - Yes	Panter, Michael J. - Yes
	Payne, William D. - Yes	Pennacchio, Joseph - No	Pou, Nellie - Yes
	Prieto, Vincent - Yes	Quigley, Joan M. - Yes	Roberts, Joseph J., Jr. - Yes
	Rooney, John E. - No	Rumpf, Brian E. - No	Russo, David C. - No
	Scalera, Frederick - Yes	Schaer, Gary S. - Yes	Stack, Brian P. - Yes
	Stanley, Craig A. - Yes	Stender, Linda - Yes	Thompson, Samuel D. - No
	Truitt, Oadline D. - Yes	Vainieri Huttle, Valerie - Yes	Van Drew, Jeff - Yes
	Vandervalk, Charlotte - No	Vas, Joseph - Not Voting	Vega, Silverio A. - Yes
	Voss, Joan M. - Yes	Watson Coleman, Bonnie - Yes	Whelan, Jim - Yes
	Wisniewski, John S. - Yes	Wolfe, David W. - No

The State Giveth, The State Taketh Right Back

The Assembly Labor Committee voted yesterday to jeopardize New Jersey's most successful job creation program. Business Employment Incentive Program (BEIP) grants work to entice companies to expand or locate within New Jersey by paying a portion of the company's income taxes provided they generate at least 25 new jobs.

It's a pretty simple deal - the government offers to lower costs as a way of creating jobs. Since its inception, the program has helped create 70,000 jobs and $11.9 billion in new business investment in New Jersey.

The committee voted yesterday to tie prevailing wage requirements on all construction work done by BEIP grant recipients. The mandate requires companies accepting a grant to pay the standard union wage, regardless of whether they use union workers. Prevailing wage requirements drive construction costs up between 10% - 25%.

In other words, the program has created 70,000 NJ jobs by lowering the cost of doing business. Now, a string of using the program will be to increase the cost of doing business.

Even better, A-4001 also requires a landlord to pay the prevailing wage if a BEIP recipient occupies at least 55% of their building. Even for work done elsewhere on the property. Now, a quasi-related third party would be able to jeopardize your incentive grant. That leads to unacceptable unpredictability.

Our one-pager on the bill is available here. The committee vote is available below. A "NO" vote is a vote consistent with CIANJ's position.

Assemblyman Joseph Egan - Yes
Assemblyman Jeff Van Drew - Yes
Assemblyman Neil Cohen - Yes
Assemblyman Michael Doherty - No
Assemblyman Guy Gregg - No
Assemblywoman Shelia Oliver - Yes
Assemblywoman Nellie Pou - Yes

Today in Trenton: Jeopardizing New Jersey's Most Successful Job Creation Program

Here in New Jersey, different administrations and legislatures have tried different ways to spur on economic growth. The most successful of all programs in the state has been the Business Employment Incentive Program (BEIP).

BEIP grants work by incentivizing companies to locate to New Jersey or to expand their operations here. They offer businesses the carrot of a 10%-50% reduction on the company's share of the state income tax in exchange for creating at least 25 new jobs in the Garden State. The reduction increases to up to 80% for companies which assist the state's smart growth initiatives. Since its creation in September 2003 the state has invested $1.1 billion into the program. The result has been $11.9 billion in business activity because of the grants and 70,000 new jobs.

Today the Assembly Labor Committee will reconsider legislation that will lessen the effectiveness of the program. A-4001/S-2247 would require BEIP grant recipients to pay the prevailing union wage on any construction work done to build or grow operations. Your friendly blogger will be in Trenton testifying in opposition.

1. CIANJ opposes an expansion of the prevailing wage into the private sector. Government has already established a minimum wage and to require a business to pay an artificially higher wage drives higher costs. That whole cost should be at the intersection of supply and demand thing.
   
2. BEIP grants work because they reduce the cost of doing business. The prevailing wage increases construction costs by 10% - 25%. So the state will now have a cost reducing incentive program that can only be accepted if the grant recipient agrees to a mandatory cost increase.
   
3. The bill also requires that a landlord pay the prevailing wage if a BEIP recipient occupies at least 55% of their building. This means an unrelated third party can put a company's grant in jeopardy. It would border on irresponsible for an organization to accept a grant without full control as to whether or not all of the conditions are met.

We'll link to our testimony and final vote tallies later in the day.   

Lame Duck Watch: Jeopardizing NJ's Most Successful Job Creation Program

Legislators and wannabee legislators are out touting their accomplishments and telling you why they deserve a(nother) term in office. Campaign rhetoric about creating more jobs is great and demonstrates that candidates understand the importance of a healthy economy - or, at the very least, they understand that YOU want a strong economy and to see your taxes reduced. When they arrive in Trenton, they'll have to grapple with sometimes boring bill language that has not-so-boring reverberations across the business community.

In a new series, Lame Duck Watch, NJ Business Matters will introduce or re-introduce you to bills that you should be prepared to monitor and contact legislators about once the General Assembly and Senate re-convene after the November Elections. In today's Lame Duck Watch, we introduce you to A4001/S2247, which would expand prevailing wage requirements to the PRIVATE sector and for PRIVATE jobs, thus increasing construction costs on non-government job sites.

A4001/S2247 would also alter New Jersey’s most successful job creation program – the Business Employment Incentive Program (BEIP). The legislation would require BEIP grant recipients to pay the prevailing union wage on construction projects related to their move to or expansion within New Jersey.

Since its inception BEIP has generated more than 67,000 jobs and $11 billion in investment. The program’s success is directly related to its structure, which would be significantly altered should this legislation pass. BEIP grants utilize incentives and accountability tied to actual job creation and wages. The program exists to reduce the cost of doing business in the state and make New Jersey more attractive to companies considering expanding operations in or locating to the state. Unfortunately, this legislation would make BEIP grants less attractive to these companies.

Prevailing wages increase the cost of construction projects by up to 25%. CIANJ believes it is self-defeating for the State to have a program in place for the purpose of reducing costs while simultaneously mandating cost increases.

CIANJ is also concerned about the effect the legislation would have on third parties. As currently written, A4001/S2247 would mandate prevailing wage rates to be paid by a landlord or developer for construction projects if a BEIP company occupies at least 55% of a property. A BEIP recipient could be responsible for ensuring a landlord paid the prevailing wage on a project or jeopardize their grant. Companies considering taking advantage of the program would now have to take into account that an unrelated or quasi-related third party would have the ability to jeopardize their grant. It's hard to imagine participating in a program with that string attached.

The increased construction costs and administrative difficulties created by A-4001/S-2247 would nullify the benefits of BEIP grants for many companies, and the CIANJ urges legislators to vote "NO" in the Fall.