Shoppers in 5 NJ cities are paying more after UEZ sales tax expires
Five cities didn’t take part when New Jersey’s sales tax dipped slightly Sunday. They instead experienced a sizable tax increase, as their Urban Enterprise Zones designations expired.
For the first time in 30 years, businesses in the UEZs in Bridgeton, Camden, Newark, Plainfield and Trenton are charging and paying the same sales tax as most of the state, 6.875 percent. They had been charging half, or 3.5 percent, until the zones were allowed to expire at the end of 2016.
Lawmakers had passed a bill at their final session of 2016 that would extend the zones for two years while the Department of Community Affairs studies the program, but Gov. Chris Christie – who has called the UEZ program "a failed 30-year experiment" – hasn’t acted on it.
Christie still could sign the bill; he has until Feb. 9 to decide. If he did, it would then take effect retroactively to Jan. 1. His office isn’t saying what he’ll do.
“We have spoken to the Governor’s Office, but there’s no indication as to what the next steps are,” said Mike Cerra, assistant executive director of the New Jersey State League of Municipalities, who remains optimistic the zones could be restored.
“There is a recognition I believe that this is a different bill – a very different bill than what was conditionally vetoed last year,” Cerra said. “It’s not a 10-year extension for these zones but rather a short-term extension. And it includes the language from his conditional veto from last year.”
In a 2011 report to the Christie administration, consultants said the UEZ program delivers a limited economic impact and a negative return on investment.
Trenton Mayor Eric Jackson described Trenton’s UEZ program as “temporarily expired.” He said his next conversation with Christie will be an attempt to restore what he called a “very important economic tool” that attracts businesses through tax exemptions and tax credits for new workers and investments.
“I had a couple businesses say to me now that they were already on the margin and losing this benefit, they are probably looking toward moving to another community. That’s exactly what we don’t want to happen, and I’m confident in my conversations with the governor what he doesn’t want to happen,” Jackson said.
Jackson was on hand Wednesday as Christie signed a law, at the African-American Chamber of Commerce in Trenton, designed to make it easier for small businesses to compete for federal and state contracts through a new Economic Development Authority program that will help provide surety bonds.
In his remarks, Christie touted the cooperative relationship he has with Jackson, contrasting it with previous mayors and saying it will help economic growth in the city.
“Now we have regular communication with each other, setting of priorities. And I know it’s going to lay the foundation over the course of the next year for extraordinary growth in the capital city. We would think that that would be a normal course of business. But it hasn’t been,” Christie said.
“We’ve seen it happen in Jersey City. We’ve seen it happen in Hoboken. It’s now happening in Newark and Camden,” Christie said of redevelopment efforts. “And Trenton is our next target because the capital city of this state should be one that is leading the way and not falling behind.”
Jackson plans to use those lines of communication to press the case for the UEZs.
“We believe it’s a tool that is essential in urban cities, particularly like the city of Trenton, that it’s another tool that encourages business,” Jackson said. “Not only that people who come to their business save on the sales tax, but when they’re purchasing goods and services they get a reduction as well. That helps their bottom line and enables them to have better established businesses in our city.”
If the bill were to be signed into law, it would take effect retroactively. But Cerra said he doubts that would mean sales-tax refunds to consumers who pay 6.875 percent in a once-and-future UEZ.
“It probably would not change. I don’t think there would be a retroactive enactment of that,” Cerra said. “Realistically, we would be going forward just because it probably isn’t worth the administrative effort if nothing else to go backwards.”
Twenty-seven UEZs continue to operate in 32 other municipalities but would slowly disappear unless eventually extended.