
Bill to restart BEIP payments angers some NJ businesses
DECEMBER 20, 2015 LAST UPDATED: SUNDAY, DECEMBER 20, 2015, 1:21 AM
BY HUGH R. MORLEY
STAFF WRITER |
THE RECORD
The passage last week of a bill that would restart incentive payments to about 270 New Jersey companies owed hundreds of millions of dollars for creating jobs in New Jersey sounds, at first glance, like good news for the companies.
Yet the legislation has upset some of the businesses by including a delayed payment schedule that means some won’t get their money for years.
The state stopped funding the Business Employment Incentive Program (BEIP) more than two years ago, after underfunding it and skipping payments for years because of budget constraints. The revived program changes the method of payment, from rebates needed to be provided for in the state budget, to tax credits, which are reductions in taxes the businesses have to pay.
But the new system’s delayed payment schedule has only renewed criticism from the companies affected, which are now owed $785 million.
Payments not made between 2008 and 2013, for example, will now be paid in five installments, beginning in 2017 and concluding in 2021 – more than a decade after some first became due. Payments not made in 2014 and 2015, won’t be paid until 2019, and all payments for the next five years will be paid at least three years after they are accrued.
Sponsors of the bill, which passed both houses of the Legislature on Thursday and is expected to be signed by Governor Christie, say the payment delays are needed to cope with an estimated total obligation of $1.267 billion once all the bills are paid by 2025. The estimate comes from the state Economic Development Authority, which manages the state economic development programs.
But the delays are too long for some companies already irate that they reshaped their business – in some cases moving into New Jersey from out of state – based on a commitment that the state hasn’t kept.
“That’s absolutely asinine, literally,” said Thomas Churchill, vice president for operations at Model Electronics in Ramsey, of the delayed payment schedule.
Churchill, whose company remanufacturers audio navigation and other auto parts, added, “If they are doing it over a period of time, it becomes monotonous, and idiotic. It becomes very, very hard to manage, and it’s probably not worth the cost.” He said spreading payments over several years makes calculating how much money the company receives, and the taxes owed on it, more complicated and burdensome.
Churchill’s company moved from Rockland County, N.Y., to Bergen County in 2005 with the help of a grant for $468,000 over 10 years, contingent on bringing 85 new jobs to the state. After he fulfilled that commitment, the state at first paid the annual rebate checks on schedule, but the company has not received a check since getting the company’s 2011 incentive payment.
Another business owner, who is owed payments but declined to be identified, welcomed the bill but added: “However, I cannot get excited for something that is four years away, and six years after the first payment was due initially.” In a reflection of how the BEIP history has damaged confidence in the state’s development efforts, the owner added: “I am sure anything can happen and change by then anyway, as it did two years ago.”
https://www.northjersey.com/news/business/n-j-trying-to-make-good-1.1477063