For the business world, Trenton hasn't always been seen as a friend, but that doesn't mean state government hasn't had its share of positive moments over the past quarter-century. In discussions with business leaders and lobbyists, these are bills that were most frequently cited as the most friendly to businesses over that time. Written by Andrew Kitchenman.
1987 | LIMITED LIABILITY
In the 1980s, executives cited the liability faced by corporation officers and directors as a reason it was difficult for companies to attract qualified directors to their boards, leading Thomas Kean to sign the Ray Lesniak-sponsored bill. Kean spokesman John Samerjan said the bill allowed corporations to defend executives without protecting "breaches of loyalty, acts in bad faith or intentional wrongdoing." It's the kind of bill that's fondly recalled by executives who remember the 1980s as a decade of steady improvement in the state's economy.
1987 | MANDATORY RECYCLING
While it received mixed reviews from the business community at the time, its legacy continues to be seen in offices around the state, through the ubiquitous blue bins at almost every workstation. When Kean signed the recycling law, it helped expand the state's recycling industry, said Jeff Tittel, director of the New Jersey Sierra Club. At the time, counties were spending hundreds of millions of dollars to build incinerators; the bill "has saved us tens of millions of dollars in landfill costs."
1988 | GAS TAX INCREASE
While Kean signed the Transportation Trust Fund into law earlier in his tenure, this later measure to strengthen the fund is particularly notable because it was the last time this tax, which fuels the TTF, was increased. And while business owners are frequently opposed to tax increases, New Jersey Utilities Contractors Association CEO Bob Briant Jr. argued that they benefited from this measure. "Businesses need to get goods and services, they need to get employees to work," and they depend on the infrastructure funded by the gas tax, Briant said. It also acted as "a boost and a shot in the arm" for the construction industry.
1992 | TELECOM DEREGULATION
The state's telecom giant was burdened with regulations that were from another era, and the company said it would be able to increase its investment in the state if the government peeled away regulatory hurdles. That may sound like the unsuccessful legislative battle pursued by Verizon in 2011, but it also is true of the scenario Verizon predecessor New Jersey Bell faced in 1992; unlike in 2011, the Telecommunications Act made it through the legislative gantlet and got Jim Florio's signature. The law led to later efforts to expand fiber-optic cables in the state, but didn't resolve all long-term challenges facing the legacy telephone company.
1992 | ECONOMIC RECOVERY FUND
While Florio and legislative Republicans may not have found much common ground during the last two years of his term, they did agree on some business-related bills, including nearly unanimous support for this $200 million measure, passed as part of a package that reduced the sales tax from 7 percent to 6 percent — a reduction that was later undone. The legacy of the bill includes an expanded Atlantic City International Airport and the New Jersey Performing Arts Center, in Newark. It was also the first program overseen by Caren S. Franzini after she joined the EDA, but before she became its CEO.
1993 | S CORPORATIONS
Longtime New Jersey Business & Industry Association lobbyist Arthur Maurice, now president of Tonio Burgos & Associates of New Jersey, said when Florio signed this bill, it represented another step toward improving the state's competitiveness, as it allowed New Jersey companies to organize in a way already permitted at the federal level. The advantages of S corporation status include giving owners the ability to offset their income tax liability by applying corporate losses to their personal income and to transfer ownership shares without adverse tax consequences. "It basically brought us back into the fold of what most states in the country did at the time," Maurice said.
1993 | INDUSTRIAL SITE RECOVERY
Businesses affected by new regulations from the 1983 Environmental Cleanup Responsibility Act were able to have more of an impact a decade later in influencing this bill. The 1983 bill attempted to address more than a century of environmentally contaminated industrial sites, but it did so by applying heavier regulations than other states had on the books. The 1993 bill Florio signed was a step in the right direction, they said, while the 1997 Brownfields Act was another positive step. But it wasn't until the 2009 law allowing for licensed site remediation professionals that the state really got the message of the business community.
1994 | INCOME TAX CUT
Perhaps the most intensely debated bill of the past 25 years, Whitman's first budget led to significant reductions in income taxes, though critics said it contributed to the state borrowing too much to meet its obligations. But it was critical to businesses in New Jersey, Maurice said, and subsequent events haven't altered his sense that it was a necessary step at the time. "Tax cuts are always welcome, but particularly in New Jersey, taxes are just too high across the board," he said. "Her first budget realized the need to cut taxes and to balance the budget. It achieved both ends, so it was a very good thing."
1995 | REGULATORY ALIGNMENT
Another item that was long sought by the business community, Whitman signed this measure as a way to require state agencies to justify proposed regulations that exceeded federal standards. It pushed back against what some executives saw as the state's tendency to push regulations that were far out of line with national standards. Maurice said it was a needed step to "cutting the duplications, the redundancy" of forcing businesses to follow separate sets of state and federal regulations.
1997 | PORT DREDGING BOND
Port Newark-Elizabeth Marine Terminal received a major shot in the arm when Whitman signed the law authorizing the use of bond funding for dredging. The issue had been stuck due to concern about where contaminated dredging material would be placed. After Whitman authorized the use of some of the material as construction fill, the state could move forward on the project, which was long supported by port businesses. "It was becoming a crisis, because our ports were in desperate need of dredging," Medina said. Joseph Curto, president of the New York Shipping Association, said shipping companies would have shipped products to the New York area through another port without dredging, and "our port would have gone the way of the buffalo."
1997 | BROWNFIELDS ACT
Like the Industrial Site Recovery Act of 1993, Whitman's signing of the Brownfields Act was another step toward reconsidering the impact on the business community when considering new environmental regulations. "The state started the trend toward listening to the regulated community in the last 15 or 20 years, and going back and improving on the legislation of the prior decade or so," said Michael Egenton, senior vice president of the New Jersey Chamber of Commerce.
1999 | ENERGY DEREGULATION
Whitman said at the time that the competition within neighboring states was lowering costs and putting pressure on New Jersey's economy. This bill allowed electricity suppliers to compete for customers, while expanding the tax base in the energy sector and mandating price cuts. Maurice said the business community supported the deregulation effort: "That was something that brought both our taxation into the 21st century, but allowed competition, which has proven to be good for the state."
1999 | TAX CERTIFICATE TRANSFER
Franzini calls this one of the most business-friendly bills she's seen in her time at the EDA: "It was a groundbreaking program and the only one of its kind in the country." The Technology Business Tax Certificate Transfer program got Whitman's signature thanks to its lofty goals of further expanding New Jersey's biotech industry and, on the tech side, becoming Silicon Valley East. Franzini pointed out that Celgene received $3.5 million in the program's first round; "today, Celgene is one of the largest biotechnology companies in the world," she said.
2001, 2011 | CORPORATION BUSINESS TAX
Bills that reduced the number of businesses affected by the corporation business tax and based the tax on a single sales factor are favorites in the C-suite. Donald DiFrancesco in 2001 signed into law the elimination of corporation business tax for S corporations with less than $100,000 in income, which put the state on track to see the CBT eliminated for all S corporations by 2003. Jim McGreevey in 2002 overhauled the CBT, increasing the amount the state raised from the tax, but Christie answered in 2011 with the single sales factor, which narrowed the basis on which corporations are taxed.
2001 | PILOT
When DiFrancesco signed the Redevelopment Area Bond Financing Law, it allowed more flexibility for municipalities to pursue payments in lieu of taxes, or PILOTs, as part of redevelopment projects. Franzini said the measure has proven useful in economic development efforts, and "continues to be a highly effective redevelopment tool that has helped businesses and communities."
2003 | AUTO INSURANCE REFORM
Auto insurance companies that had been wary of New Jersey increased their presence in the state after McGreevey signed what may be the signature bill of his administration. The law was intended to increase competition and consumer choice, and began to bear fruit within months, with Mercury General entering the New Jersey car insurance market and Allstate expanding its operations in the state. As Richard C. Crist Jr., then-president of Allstate New Jersey, said of the law at the time: "It ensures strong consumer protection while encouraging and generating more competition and choice for New Jersey drivers."
2008 | THROW-OUT RULE
This bill, signed by Corzine, required New Jersey corporations to pay the higher New Jersey tax rates on corporate profits from outside the state, repealing a provision of the 2002 CBT overhaul that was particularly troubling to the business community. As part of a package of measures, the "regular-place-of-business" rule was also repealed. That had required a corporation to maintain a staffed office outside of New Jersey in order for it to have out-of-state income not be subject to New Jersey taxes. The NJBIA estimated the repeals saved New Jersey corporations $150 million annually since taking effect July 1, 2010.
2008, 2011 | CARRY FORWARD
Separate bills passed three years apart, signed by Corzine and Christie, expanded the period for which businesses can "carry forward" their net operating losses to reduce their tax liability to 20 years, from seven years. The 2008 law applied to the CBT, while the 2011 measure allowed business owners to pay personal income taxes on their business income. Maurice called it "a wonderful thing for businesses in a down year."
2009 | SITE REMEDIATION
"It seems like every decade or so we go back, we have seen improvement in site remediation and cleanup," Egenton said. "It's a win-win in my opinion. You're cleaning up contaminated properties." When Corzine signed this bill, it put licensed site remediation professionals in place to oversee cleanups; by allowing businesses to rely on private professionals, it's hoped more contaminated sites can be put to new uses, he said, while clearing the logjam at the Department of Environmental Protection.
2010 | UI AMENDMENT
For years, elected officials from both parties had used the unemployment insurance trust fund as a piggy bank, leaving little funding available when the recession sent UI claims soaring. State residents put an end to this practice by approving a constitutional amendment that "sent a message to legislators and governors going forward that the UI fund was off limits for funding state budgets," said Melanie Willoughby, NJBIA senior vice president. The vote came four months after Christie and legislators agreed to phase in a $1 billion tax increase, rather than socking employers with a steep increase all at once.
2010, 2011 | TAX CAPS, CUTS
Among the measures Christie signed that were backed by the business community were a cap on property tax increases and a series of business tax cuts. The property tax cap limits towns' ability to increase their annual property tax levy by more than 2 percent, but included loopholes that have allowed some towns to skirt the limit through the use of "impact fees" for services like garbage pickup. The second piece was less successful — not all of Christie's "toolkit" proposals passed the Legislature. But there were no questions about the corporate benefits of the business tax cuts, which delivered $185 million in relief in their first year. The plan is expected to grow to more than $600 million by the fiscal year that starts in July 2015.
2011 | RED TAPE CUTS
A bill changing the Administrative Procedures Act to allow state agencies to make larger changes to rules in response to business concerns ran on a parallel track with the Red Tape Review Commission chaired by Lt. Gov. Kim Guadagno. The bill, signed by Christie, focused on reducing the regulatory barriers faced by both businesses and municipalities, as well as making regulations more transparent.
2011 | COAH MORATORIUM
The long-term status on COAH remains uncertain, but when Christie signed a two-year moratorium on Council on Affordable Housing fees for commercial development, builders who had long fought against the program's quotas were relieved. The council has long been a controversial body, with some residential developers supporting affordable housing mandates because they require municipalities to approve more housing developments, while other business owners have seen COAH as an intrusion on planning decisions that should be made at the local level.
When New Jersey executives talk about business-friendly bills, the conversation frequently moves to the several incentive programs that fuel development in the state.
From the 1996 legislation that launched the Business Employment Incentive Program and Business Retention and Relocation Assistance Grant, to the recent bill that added $250 million in funding to the Urban Transit Hub tax credit program, incentive packages have been at the center of New Jersey's economic development efforts.
Gil Medina, commerce secretary to Christie Whitman, recently recalled sketching out the original incentives on napkins during a brainstorming with former presidential candidate Steve Forbes at a hacienda near Mexico City in late 1995.
"All of these programs were really vital because we had no tools with which to compete," Medina said.
Major incentive expansions have become a nearly annual rite since Jon Corzine backed the creation of the Urban Transit Hub credit, one of the largest state incentive programs in the country.
This was followed by the 2009 creation of the Economic Revitalization and Growth grant program, which financed development through anticipated future tax revenue, the 2011 expansion of BRRAG and the 2012 introduction of Grow New Jersey, a smaller program carved out of the transit hub funding that is less restricted than the hub tax credits.
Managing all of these programs was the purview of former New Jersey Economic Development Authority CEO Caren S. Franzini, who cited incentives in giving her own view of the key business-friendly measures of the past quarter-century.
Along with attracting developers' enthusiasm, these programs have drawn skepticism from critics, particularly the nonprofit New Jersey Policy Perspective. This group has consistently questioned the evidence that the incentives were necessary to attract and retain jobs, arguing that the money would have been better invested elsewhere.
Despite this criticism, incentives figure to continue as a mainstay of the state's economic development initiatives, starting with a potential reformulation of incentives with the scheduled expiration of the transit hub program in 2014.
While the first Permit Extension Act was employed in 1992 to help combat an earlier recession, it was the extension passed in 2008 — and extended in 2010 and 2012 — that has been singled out by developers as particularly important in keeping development plans from being abandoned.
"In light of the recession that we have been confronted with and the amount of investment in all of these real estate projects, to get to a place where they were ready to move forward, the only thing that stopped them was the recession," said Timothy J. Touhey, CEO and executive vice president of the New Jersey Builders Association.
Without the permit extensions, the state's homebuilding slowdown would be even worse than it has been, Touhey said. The builders are now positioned to move forward with projects if the housing market turns around.
"I think we can see a light switch by 2013," thanks to the latest extension, Touhey said. "That's the importance of this bill."