ASSEMBLY BUDGET COMMITTEE

 

STATEMENT TO

 

SENATE, No. 1562

 

with committee amendments

 

STATE OF NEW JERSEY

 

DATED:JUNE 21, 2012

 

††††† The Assembly Budget Committee reports favorably Senate Bill No. 1562, with committee amendments.

††††† †As amended, this bill amends the Urban Transit Hub Tax Credit Act to increase the cap on the total amount of tax credits authorized under the act by $250,000,000 to a total of $1,750,000,000.† The bill also amends the Urban Transit Hub Tax Credit Act by extending the application deadline to July 1, 2014, so that it is consistent with the application deadline contained within the Grow NJ Assistance Act, except that the deadline for applications for tax credits for wind energy facilities established under P.L.2010, c.57 (C.34:1B-209.4) will not be extended.

††††† The bill takes effect immediately upon enactment.††

††††† As amended and reported, the bill is identical to Assembly Bill No. 3154, as also reported by the committee.†††††

 

FISCAL IMPACT:

††††† The Office of Legislative Services (OLS) cannot project the direction or magnitude of the bill's net fiscal impact on the State and local governments.†

††††† On the one side of the ledger, the OLS notes that the bill will produce a State revenue loss of up to $250 million through Fiscal Year 2027 from the awarding of additional Urban Transit Hub and Grow New Jersey tax credits plus their indeterminate opportunity costs forgone as spending is redirected from one economic activity to another.†

††††† On the other side, the OLS notes additional tax credits that are essential to the realization of capital projects in designated areas will generate indirect fiscal benefits to the State and local governments that may, or may not, exceed the cost and opportunity cost of providing the financial assistance.

††††† The OLS notes that the estimated $250 million maximum State revenue loss through Fiscal Year 2027 reflects the difference between the urban transit hub tax credit programís current $1.5 billion cap and the billís $1.75 billion cap.† The increase in the Grow New Jersey tax credit program cap is immaterial for the calculation of the billís maximum cost, considering that the program is scored against the urban transit hub cap.†

††††† The OLS notes that the New Jersey Economic Development Authority has awarded $916.1 million in urban transit hub tax credits to 15 projects through February 7, 2012.† The Grow NJ tax credit program does not have a track record, given that the programís enabling legislation was enacted on January 5, 2012.

 

COMMITTEE AMENDMENTS:

††††† The amendments to the bill:

††††† -- decrease the cap on the total amount of tax credits authorized to be approved under the Urban Transit Hub Tax Credit program from $2,500,000,000 to $1,750,000,000;

††††† -- restore the cap on the total amount of tax credits authorized to be approved under the Grow NJ Assistance program to $200,000,000; and

††††† -- extend the application deadline under the Urban Transit Hub Tax Credit program to July 1, 2014.