Manufacturers will be able to get greater federally-authorized, tax-exempt bond financing beginning in 2007, thanks to a recently enacted change to federal law. The change will allow manufacturers with up to $20 million in total capital expenditures (double the previous limit of $10 million) to be eligible for tax-exempt bond financing. Financing of up to $10 million can be used by eligible manufacturers to upgrade facilities or install new state-of-the-art equipment and are issued at interest rates 20 percent to 35 percent below market rates. The program is administered in our state by the NJ Economic Development Authority (EDA).

The EDA and NJBIA, along with over a dozen other State business leaders, formed the Bonds for Business Coalition in 2003 to support the change at the federal level. The higher limits were enacted in 2005, but were not scheduled to take effect until 2009. In May, however, the Tax Reconciliation Act was signed into law, accelerating that effective date from 2009 to 2007.

This program has already proven to be an effective economic development and job creation tool. Even with the lower $10 million limit, the EDA has arranged $3.3 billion in low-cost financing for over 2,000 manufacturers that have, in turn, created over 62,500 permanent jobs since the program began. In 2005 alone, the EDA provided 15 manufacturing businesses with $44 million in tax-exempt bond financing that will create a projected 340 jobs once the projects are complete.

With new, higher limits, the program should be even more effective.

Even though New Jersey has one of the highest costs of doing business of any State in the nation, it is still home to a viable manufacturing sector that provides good jobs for more than 320,000 people. Many New Jersey manufacturers are able to compete with those in other States and countries by using high-tech, sophisticated manufacturing processes.

Through this program, manufacturers will have greater access to low-cost financing to pay for the cutting-edge facilities they need to survive.

To learn more about this program, contact the EDA at 609-777-4898. For more information about the Bonds for Business Coalition, contact Art Maurice at ext. 247.

More Details on Budget Deal—Some additional details have emerged about the budget and tax laws enacted July 8. The CBT minimum tax was increased from $500 to a sliding scale based on a company's gross receipts. The minimum tax is paid by companies that are taxed under the CBT but report no net profits for the year. NJBIA opposed the change. The new minimums are as follows:

•  Companies with gross receipts of $100,000 to $249,999 will pay $750;
•  Companies with gross receipts of $250,000 to $499,999 will pay $1,000;
•  Companies with gross receipts of $500,000 to $999,999 will pay $1,500; and
•  Companies with gross receipts of $1 million or more will pay $2,000

The measure also eliminated the five-year periodic inflation increase in the minimum tax. Companies with less than $100,000 in gross receipts will continue to pay the existing $500 minimum tax. These changes take effect with business tax years beginning in 2006.

Additionally, the budget imposes a new commercial realty tax on transactions worth $1 million or more. For up-to-the-minute details on how this tax will be assessed, visit the State Division of Taxation Web site.

While it is unfortunate that some business taxes have been increased, the business community as a whole will pay hundreds of millions of dollars less in business taxes than it did last year. The budget eliminates the alternative minimum assessment that taxed corporate gross receipts, reinstates full net-operating-loss deductions that had been at least partially suspended since 2003, eliminates the double taxation of S corporations and does not divert employer taxes paid to the Unemployment Insurance Fund, which would have resulted in a $300-$400 million payroll tax increase in the future. For more information, contact Art Maurice at ext. 247.

Health Benefits Reporting Bill Goes to Governor—Legislation, S-539 (Buono, Coniglio)/A-932 (Gusciora, Van Drew), that would track companies with 50 or more employees receiving State-funded healthcare passed both the Senate and the Assembly on July 7 and was sent to Governor Corzine for consideration. NJBIA opposes the bill because it is nothing more than an effort to harass business and bolster support for a healthcare tax.

The bill would track companies with 50 or more employees enrolled in Medicaid and FamilyCare, the State's subsidized health insurance program for low-income working families, as well as those who receive hospital-based charity care. Some legislators have criticized businesses for not providing generous enough benefits because some enrollees choose the government program over the health benefits offered by their employer. Incredibly, these legislators have concluded that businesses should be forced to pay more for benefits or face a healthcare tax. That bill, S-477 (Sweeney, Vitale), is awaiting action in the Senate Budget and Appropriations Committee.

Meet NJ's Top Two Legislative Leaders—Hear directly from New Jersey's two most powerful legislative leaders, Assembly Speaker Joe Roberts and Senate President Richard J. Codey. This event will be held at the Forsgate Country Club in Monroe Twp. (just off exit 8A of the NJ Turnpike) on Wednesday, September 27 from 7:30 a.m. until 10:00 a.m. Plenty of time will be set aside to answer your questions. Don't miss this informative networking event. Cost to attend is $69 per person for NJBIA members and $105 for nonmembers. For additional information call Katie Wittkamp at 609-393-7707, ext. 239, or register online. To become a sponsor, contact Sherry Esteves at ext. 219.