“The Rutgers economists have made a clear and powerful statement
that New Jersey’s BEIP program works and is an indispensable
business and jobs growth tool,” said Treasurer McCormac. “I
commend Joseph Seneca and James Hughes for a comprehensive and detailed
analysis of New Jersey’s program. The findings and recommendations
will be evaluated thoroughly to determine what changes can be made
to further improve upon the program’s documented success,” he
said.
Earlier this
year, McCormac asked Rutgers University economists Joseph Seneca
and James Hughes to review the BEIP and its economic
impact
on the state. Made public today, the report also concludes that New
Jersey cannot “unilaterally remove itself from having and using
these incentives in the ever more intense economic competition among
states and nations.”
The report noted that a typical BEIP award generating 100 jobs will
have the effect of creating 85 additional permanent jobs in other industries.
The findings also indicate that over the 10-year duration of the award,
the annual cost of the typical BEIP grant, estimated at $102,300, is
dwarfed by the estimated annual benefit of $18.4 million generated
by the project from capital and related investment, and the estimated
annual increase in local and state tax revenue ($1.26 million) created
by the award.
Al Koeppe, chairman of the New Jersey Economic Development Authority
(EDA) that administers the BEIP program in coordination with New Jersey
Commerce and Economic Growth Commission, noted that the EDA Board of
Directors will review the recommendations outlined in the report.
“Professors Seneca and Hughes have provided us with an independent
and thoughtful report that recommends changes to the program, many
of which I anticipate will be considered for EDA Board approval this
fall,” said Al Koeppe.
Caren S. Franzini, EDA Chief Executive Officer, noted she is eager
to work with the EDA Board to review the report's findings and utilize
the data as the EDA continues its efforts to enhance the program.
"I am encouraged by an initial review of the report as it relates
to the overall benefits of the BEIP program on the economy of New Jersey," said
Franzini. "Since the program's inception, the EDA has taken steps
to make the program more effective, and this report will be taken into
serious consideration as we continue to make enhancements."
Franzini also
noted that to date, EDA has executed grant agreements with 200
businesses for BEIP grants worth an estimated $640 million
over 10 years, supporting the creation of over 45,000 new, permanent
jobs in New Jersey. "BEIP is seen by other states and economic
organizations as a model for business attraction, evidenced by the
recent selection of BEIP as program of the year by the Northeast Developers
Association" she added.
Commerce
Secretary-designee Virginia S. Bauer said, "BEIP is
working better than ever. Now, it's our job at the Commerce Commission
to make it even easier for businesses to take advantage of this program," she
said.
BEIP, created in 1996 as a tool for encouraging businesses to create
new jobs in the state through relocation or expansion, was significantly
revised last year at the direction of Gov. James E. McGreevey and with
the support of the business community. Program enhancements, which
were signed into law by Gov. McGreevey on September 2, 2003, strategically
modified the program to focus the incentives on targeted industries,
such as emerging technologies.
BEIP provides
annual cash grants to qualifying businesses based on the number
of new jobs they have created in New Jersey. These
grants
may be made for up to 10 years and can equal between 10 percent and
80 percent of the total amount of state income taxes paid during the
calendar year by the employees that fill the new jobs. To qualify,
a business must demonstrate that the BEIP grant is a “material” factor
in moving the job expansion or relocation forward, that it is financially
viable, and that it will create a minimum number of jobs.
