A report by Rutgers University economists concludes that New Jersey would be engaging in "political and economic suicide" if it were to abandon its most successful job creation program, the Business Employment Incentive Program (BEIP). The report says the BEIP provides valuable economic benefits that help to offset the state's high costs of doing business.

NJBIA President Philip Kirschner said the report strongly affirms the importance of the BEIP to the health of the state economy. Since its inception in 1996, the program has helped to attract 200 projects to the State that have already created 45,000 new jobs. The report's authors say that the program's relatively modest cost "is dwarfed by" its economic benefits.

"Clearly, this program is the state's most powerful job-creation tool. The report demonstrates that the BEIP gives New Jersey a lot of bang for the buck," Kirschner said.

Rutgers University economists James W. Hughes and Joseph J. Seneca and Commerce Commission economist George R. Nagle authored the report, which is entitled: An Assessment of the New Jersey Business Employment Incentive Program. The report was released today by the NJ Economic Development Authority, which manages the program. The report was prepared at the request of State Treasurer John E. McCormac.

The report says the BEIP is an important economic development tool for New Jersey as it competes with other states to attract jobs.

"New Jersey has the highest cost of doing business of any state in this region, and the BEIP is a powerful tool that has shown itself to be effective in attracting new jobs by helping to offset those costs," Kirschner said.

In the conclusion to their report, the authors state: "We conclude that New Jersey cannot unilaterally remove itself from having and using these incentives in the ever more intense economic competition among states and nations-it would be political and economic suicide for either political party to propose an abolition of incentives."

The BEIP provides incentive grants to companies that create new jobs when they move into or expand in New Jersey. Companies must make an application to receive the grants. The revenue to pay for the incentive grants comes from the partial return of state income taxes

generated by the new jobs. Because the companies receive the grants only after they have created the new jobs, the program pays for itself.

Since the program's inception in 1996, the NJ Economic Development Authority, which manages the program, has executed 200 BEIP awards that have already resulted in the creation of more than 45,000 new jobs, the EDA said today.

Among the points raised in the report:

• The economic benefits of jobs created under the BEIP are enormous and far outweigh its costs. Every 100 permanent jobs created under the program stimulates the creation of an additional 85 permanent jobs.
• The total annual economic impact of these 185 jobs is estimated to be $18.4 million per year for each and every year that these jobs exist.
• The average annual cost of creating those 100 jobs is about $102,300. Thus, the economic benefit of the new jobs, estimated at $18.4 million annually, dwarfs the cost of creating them.
• The capital construction spending for each project generates an additional one-time economic benefit. The $10 million in average construction costs associated with 100 new jobs generates an additional $8 million in economic activity.

The full report can be found online at www.njeda.com. For more information or to obtain an interview with NJBIA President Philip Kirschner, contact Christopher Biddle at 609-393-7707, ext. 227