New Jersey is reneging on promises to pay out incentives to businesses for hiring within the state.
New Jersey state Senate will vote Monday on a measure that delays hundreds of millions in business incentive payments, NJ.com reports.
The state owes a total of $627 million to businesses as part of the Business Employment Incentive Program (BEIP), which offers grants to companies which hire within New Jersey. The program is designed to attract businesses to relocate or expand in the state. However, facing a $1.1 billion budget deficit, New Jersey legislators are trying to cut costs by spreading the payments and tax incentives out over the next five years.
New Jersey owes $135 million to Goldman Sachs under BEIP, the largest recipient of the incentives.
With fiscal year 2017 beginning Friday, New Jersey legislators are scrambling to make their budget work after tax revenues came in far lower than anticipated. New Jersey stopped accepting new applications to the BEIP in 2013.
Since 1996, BEIP has awarded grants to businesses that create jobs in New Jersey. Over the past several years, the government has struggled to make good on the payments. In January, Gov. Chris Christie signed legislation that authorized restarting the payments, and made it possible for businesses to transfer the cash awards into tax credits.
BEIP is an important offset for the state with the most burdensome labor regulations in the country. According to a the 50-State Small Business Regulation Index report from Pacific Research, “higher costs impose a difficult trade-off on businesses—businesses must either reduce the amount of workers they employ or, due to higher labor costs, their profitability must decline.”
“As companies consider New Jersey as a state to expand in or relocate to, they need to know that the state will honor its statutory commitments in these types of job-creation incentive programs,” Andrew Musick, director of Taxation and Economic Development for the New Jersey Business and Industry Association, said in a statement.
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