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Seeking a Break for Smaller Companies

Lawmakers push to expand a program to keep jobs in the stateTrenton

When Verizon decided in March to move its operating headquarters from New York to Basking Ridge rather than Virginia, a small part of New Jersey?s $80 million incentive package consisted of $2.7 million from a relatively little-known state program called Business Retention and Relocation Assistance Grants (BRRAG).
Verizon is one of eight companies, including CitiGroup in Warren and Ernst & Young in Secaucus, that have benefited from the year-old program, which pays companies up to $1,500 for each employee they have after expanding or moving to a new location within the state. Recipients must keep the operations in the state for at least five years.
Now business leaders are campaigning in Trenton to amend the program to enable smaller companies to qualify for BRRAG. The program, which is currently restricted to companies with 250 or more employees, has disbursed only about $11 million of the $20 million the state budgeted for the fiscal year that ends June 30. A bill (A-3834) recommended by the Assembly Commerce and Economic Development Committee would lower the threshold to companies with 50 or more employees.
?Over 90% of companies are smaller scope, but in the aggregate they are the backbone of our economy,? says Assemblyman Doug Fisher (D-Gloucester), the sponsor of the bill. ?This allows tax incentives for companies that would [otherwise] take up and move to another state.?
The bill has the support of the New Jersey Business and Industry Association (NJBIA), which says it will help the state retain manufacturing companies. ?There is no additional cost in the budget because the program is capped at $20 million,? says Arthur J. Maurice, first vice president of the NJBIA. ?If money is available at the end of the year, we can give it to companies with 50 or more employees and see what kind of demand there is.?
But not everyone is on board. Jon Shure, president of New Jersey Policy Perspective, a Trenton think tank that recently blasted the use of the popular Business Employment Incentive Program (BEIP) to help retain Verizon, says the state is giving away too much to business.
?First, there are tax breaks for businesses to come here and then there are tax breaks for companies of a certain size to consolidate, and now that is being expanded,? Shure says. ?Soon there won?t be any businesses that can?t get a break.?
Shure wants the state to ?provide an item-by-item section in the budget on these programs so they can be scrutinized to determine the real costs and benefits.?
State Treasurer John McCormac says New Jersey must offer incentives to compete with those available from other states. McCormac says grants such as BEIP and BRAGG represent a giveback of a portion of the taxes that businesses pay rather than an outlay of taxpayer dollars.
email sgoldstein@njbiz.com

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