N.J. lawmakers to vote on stimulus bill

While many New Jerseyans are bracing for the pinch of a tight state budget, lawmakers are expected to approve an economic-stimulus bill that would give developers significant tax breaks.

The measure, along with a budget bill, is scheduled for a floor vote in both houses of the Legislature today.

Sen. Raymond Lesniak (D., Union), the Senate sponsor of the stimulus bill, said it "will spur billions of dollars of private development and create tens of thousands of construction jobs."

"With it, New Jersey can lead the country in job growth and construction," he said during a budget committee hearing Monday.

Supporters include labor unions, the business community, and officials from Jersey City, Newark, and other municipalities.

But critics take issue with several of the bill's diverse provisions.

Many also argue the legislation has been rushed through without an adequate analysis of its potential effects. Parts have been debated in the Legislature as separate bills for months, but the combination bill was not available to the public until this month.

"We know this legislation will cost billions, but exactly how much is unclear because there has been no analysis," said Jeff Tittel, director of the New Jersey Sierra Club.

Naomi Bressler, a policy analyst with the left-leaning New Jersey Policy Perspective, said the bill would divert money from public programs and services when falling tax revenue has already forced deep cuts in services.

"Is subsidizing the construction of a new mall more important than providing after-school programs to poor children?" Bressler asked during the committee hearing. "Is it more important than providing more access to affordable higher education to all high school graduates or Medicaid payments to nursing home residents?"

The bill touches on a broad range of issues.

One section would allow developers whose proposals meet certain criteria to receive up to 75 percent of the tax revenue created by their projects for up to 20 years.

Bressler said developers would be allowed to receive revenue from 22 state and local taxes, including the corporate business tax and the sales and use taxes, making it the most generous program of its kind in the country.

The measure is intended to benefit only developers who otherwise would not build a project. Lesniak said that meant the bill would not cost the state or towns tax revenue because it would add only revenue that would not have come in otherwise.

But critics argue it is too difficult to prove which projects would have happened without the tax incentives.

"Financially, we don't think the bill makes a strong enough distinction between a development that would occur anyway," said David Pringle, campaign director of the New Jersey Environmental Federation.

Environmental advocates also worry the bill could subsidize projects in undeveloped areas.

A similar state program confines tax incentives to previously developed sites in economically distressed areas, but the new bill places no such restriction.

Another section of the bill would make it easier for companies to receive a tax credit for investing in capital projects and bringing jobs close to mass-transit stations in cities including Camden.

Companies that cannot use their entire tax credit could sell the credit to someone else at a discount.

The bill would also set a temporary moratorium on the 2.5 percent fee levied on commercial and industrial development for affordable housing.

An earlier version would have refunded developers about $19 million in such fees. Advocates for the poor called that a windfall for developers that would have done nothing to promote development.

The bill was amended so that developers would be reimbursed only about $6 million, estimated Staci Berger, director of advocacy and policy of the Housing and Community Development Network of New Jersey.

Assembly Speaker Joseph Roberts Jr. (D., Camden), a sponsor of the Assembly bill, said state officials initially estimated the statewide nonresidential development fee, adopted last year, would bring in $163 million annually. But with the tanking of the economy, the revenue was closer to $20 million, he said.

"I was . . . concerned that right now any additional fee that serves as a barrier to development is something we should rethink," Roberts said of the moratorium. He said it did not mean the state was backing away from its commitments to affordable housing.

The bill also would appropriate $15 million from the general fund for affordable housing.

One measure in the bill was intended to help a struggling steel mill in Sayreville, although it could help other manufacturers that meet the bill's requirements. The bill would give such companies a break on the sales tax from energy purchases, said Assemblyman John S. Wisniewski (D., Middlesex), who pushed for the provision.

He said that he had been lobbying for a separate bill to accomplish just that for some time and that when he heard about the stimulus bill, he thought it was exactly the kind of thing that should be included.

Republican lawmakers have said that while they agreed with many of the ideas in the bill, they had problems with some of the details.

Sen. Joseph Pennacchio (R., Morris), who voted against it in the committee Monday, said he liked much of the bill. One of his concerns is a provision to allow colleges to award no-bid contracts to build campus projects, he said. He also objects to a proposal to allow Elizabeth and Newark to increase taxes on car rentals.

But supporters say the bill would help give the state's economy a much-needed jump start.

Mike McGuinness, chief executive officer with the National Association of Industrial and Office Parks in New Jersey, was among those who argued in favor of the bill at the committee hearing Monday.

"We ask you not to consider these incentives as a cost but rather as an investment in New Jersey's future that will reap dividends for years to come," he said.