|FOR IMMEDIATE RELEASE||
CONTACTS: Tom Vincz
|August 5, 2004||
Rutgers Economists Offer Praise, Suggest Improvements in Detailed Study of Business Employment Incentive Program
| TRENTON – New
Jersey’s Business Employment Incentive Program (BEIP) generates
significant job, economic, and tax revenue benefits to the state according
to a Rutgers University study, State Treasurer John E. McCormac announced
“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.