New ED Funding Legislation in New Jersey

NJ Governor James E. McGreevey recently signed into law the Business Employment Incentive Program (BEIP) legislation, which establishes a stable funding source for the program, as well as enacts critical enhancements to BEIP.

The new law authorizes the Economic Development Authority to fund grants through the issuance of economic development bonds, if no appropriation is authorized for BEIP grants in the State budget.

The new law also expands BEIP benefits to companies that could not take advantage of the program due to New Jersey's reciprocal agreement with Pennsylvania. Under this agreement, New Jersey employers pay no withholding taxes on employees who reside in Pennsylvania. The Governor's plan allows BEIP awards be made to companies that meet all the criteria, but would otherwise be hindered by the reciprocity agreement. This initiative would allow all new jobs brought by a company to the state with the BEIP incentive, including New Jersey jobs filled by residents of Pennsylvania, to be factored into the BEIP grant to the employer

The changes to the business incentive program include a more targeted job growth strategy by allow larger grants to businesses within targeted industries, including high technology, biotechnology, financial services, logistics and transportation. In addition, the new program allows for a lower job creation threshold to allow more companies to utilize the incentives. Overall, the threshold will be lowered from 75 jobs to 25 jobs created. However, if the company is within the high tech or biotech industry, the minimum jobs required to be created will be 10.

Revamping the BEIP program also means incorporating an important principle of the McGreevey Administration smart growth. Originally, BEIP applicants could be eligible for a maximum grant award of up to 80% of the total amount of the State income taxes withheld by the business during the calendar year for the new employees hired. The new BEIP sets a new maximum grant award of 50%, but allows for awards up to 80% 5o if the company utilizes smart growth principles.

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