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Elizabeth mayor fears Gov. Christie is killing Urban Enterprise Zones program

As New Jersey celebrates the 350th anniversary of its founding, the original state capital lags pitiably in terms of income, education, and home ownership.

As New Jersey celebrates the 350th anniversary of its founding, the original state capital lags pitiably in terms of income, education, and home ownership.

Although Elizabeth - the fourth-largest city in the Garden State - holds distinctions as both the world's largest container ship port and the largest Foreign Trade Zone in the United States, nearly one-fifth of its population lives in poverty and its February unemployment rate was 3.4 percent higher than the rest of the state and 4.5 percent higher than the national average.

So it's not surprising that Mayor J. Christian Bollwage gets a little irked over news that Gov. Christie is proposing what Bollwage and others view as a damaging blow to a program that's brought his city 7,000 jobs and $2 billion in economic development over 25 years.

"Taxing businesses will almost be the final dagger to the [Urban Enterprise Zones]," the six-term Democratic mayor said.

He was referring to the state initiative launched in 1983 that designates portions of 37 blighted New Jersey cities as areas that can offer sales-tax exemptions and reductions along with special financial programs to participating businesses.

Boasting the highest participation rate in New Jersey and recognition (by the National Association of State Development Agencies) as running the best Urban Enterprise Zones program in the nation, Elizabeth has enrolled more than 1,000 businesses and reaped $100 million in direct reinvestment.

In 1998, Bollwage founded and chaired the Urban Enterprise Zones Mayors Commission.

But in his proposed fiscal-year 2015 budget, Christie is trying to impose a 3.5 percent sales tax on Urban Enterprise Zone businesses that buy capital equipment and make investments to build, expand, or upgrade their facilities. Currently, Urban Enterprise Zone businesses pay no tax on those transactions.

The state Treasury Department says the move would generate $70 million annually and bring fairness to a system that exempts Urban Enterprise Zone business-to-business purchases while requiring consumers to pay 3.5 percent in sales tax when they patronize Urban Enterprise Zone businesses - half the regular 7 percent tax.

Bollwage and other critics call the proposed tax an attack on the poor.

"I find it ironic that the administration has a philosophy of less taxation for the rich, plus tax credits as an economic incentive, yet here in the [Urban Enterprise Zones] they're using tax hikes without any analysis, which is unfair," said Assembly Budget Committee member Joseph Cryan (D., Union).

During a budget hearing last week, he asked Department of Labor and Workforce Development Commissioner Harold Wirths if the governor had asked for an analysis of whether his proposal would have an adverse impact on hiring in the Urban Enterprise Zones.

Labor Department spokesman Brian Murray said the department had received no such request and, "to put things into context, the Legislature has introduced and continues to introduce many pieces of legislation that may impact businesses, employment, wages, employer taxes, and worker benefits and it is all done without anyone asking for any analysis by this department."

But critics such as Cryan also noted the timing of the proposal, pointing out that just four months ago, a Christie-supported law went into effect that significantly expands available tax incentives to companies locating or relocating in even the most affluent parts of New Jersey.

"Honeywell got [Economic Development Authority] money to redevelop in Morris County. You and I would both like to live there," Cryan said.

Responding to Cryan and Bollwage, Christie spokesman Michael Drewniak said in an e-mail: "I would challenge you to ask these 'critics' what actual evidence they can point to that affirms in any way the Urban Enterprise Zones program is getting the results intended."