TRENTON — A state consultant’s report calls for scrapping the 30-year-old Urban Enterprise Zone Program, which attempts to rejuvenate distressed commercial districts by charging only half the state sales tax. The report, authorized by Gov. Chris Christie and released Thursday, also said the state should consider dropping the film tax credit and narrow the focus the of the state’s...
George Street Camera and Framing Company is located in the recently approved boundaries considered an urban enterprise zone in downtown New Brunswick.TRENTON — A state consultant’s report calls for scrapping the 30-year-old Urban Enterprise Zone Program, which attempts to rejuvenate distressed commercial districts by charging only half the state sales tax.
The report, authorized by Gov. Chris Christie and released Thursday, also said the state should consider dropping the film tax credit and narrow the focus the of the state’s Technology Business Tax Certificate Transfer Program to biotechnology, where it has been successful.
The report drew quick criticism from Democratic lawmakers, who disputed its findings and said the affected commercial corridors would turn into ghost towns if Christie follows through with the report’s recommendations.
A spokesman for Christie said the governor has not endorsed the report, but said it should inform policymakers as they look at ways to better align the state’s economic-development policies.
The UEZ program allows 32 designated commercial districts to charge half the state sales tax. The tax revenues generated by UEZ businesses are dedicated for economic-development projects within the zones.
Those dollars have been used for hiring police and staff to coordinate revitalization efforts, as well as other improvement measures.
But the report found that for every dollar spent from 2002 to 2008, the state saw just 8 cents in return. Without providing specifics, the report said that spending was often unaccounted for and that success was nearly impossible to measure.
The study — conducted by the New Jersey Institute of Technology, Delta Development Group and HR&A Advisors — noted that while other states have streamlined the process, New Jersey’s program is "bureaucratically cumbersome, costly to operate and involved over 135 state and local employees."
The report recommends replacing it with a much leaner one that focuses more on economic development and better leverages private investment.
Christie has all but suspended the program since taking office, keeping the lower sales taxes in place but redirecting revenue into the state budget.
Assemblywoman Joan Quigley (D-Hudson) questioned the findings, saying the report "ignores reality." She said the program supports 133,000 full-time jobs and has attracted $31.6 billion in investment into struggling communities.
Since the program started, 30,000 businesses have benefited from it, and sales tax revenues generated by UEZ businesses have led to 2,620 economic-development projects, Quigley said.
New Brunswick Mayor Jim Cahill said that while he is disappointed in the lack of revenue in the short term, he hopes to see a better-designed program in the next few years.
"I think it opens the door to some real opportunities for economic development, job creation if they establish a program that is well-designed and well-managed," Cahill said. "There are significant inefficiencies and bureaucracies in the UEZ program."
Store owners in affected districts fear the report marks the beginning of the end for these zones and the sale-tax breaks that attract customers
Yan Vayner, owner of Cohen’s Fashion Optical at the Jersey Gardens outlet mall in Elizabeth, notes that customers who currently pay 3.5 percent on nonprescription sunglasses, which range from $250 to $500, may balk at the extra money. "Even with higher-end (customers), it’ll make them think twice," Vayner said.
The report also wants to scrap the New Jersey Film and Media Tax Credit Program, established in 2005 as way to attract filmmakers to the state. The $15 million program has produced moderate activity, but exactly how much is hard to calculate, the report states.
Assemblyman Lou Greenwald (D-Camden) noted the report says the credit is a "cost-effective way for New Jersey to create and maintain jobs in the film industry" and accused the governor of twisting the findings.
"This is just another example of the Christie administration living in a fantasy land where facts and realities are ignored in favor of the governor’s singular agenda," he said.