Zone Expiration
By Albert B. Kelly
Come December 31st
this year, the City of Bridgeton, beyond closing the books on calendar 2016,
will no longer be designated as an Urban Enterprise Zone (UEZ) community.
Neither will Newark, Camden, Trenton, or Plainfield. That means that
UEZ-certified businesses who currently take advantage of certain UEZ incentives-
such as charging 50% sales tax or purchasing certain items tax exempt- can no longer
do so after December 31st. In Bridgeton it impacts 70 businesses-
I’m not sure about the other zones.
On one hand, you can argue
that this day was always going to come. After all, the program had a start date
and an expiration date with an extension along the way. Bridgeton was
designated as a UEZ community on January 1, 1986 for a 20 year period. Legislation
allowed for a 16- year “one-time” extension which had to be requested in 2000
as per the regs. This was done and that’s why December 31st means
the end of the program in Bridgeton.
The Vineland-Millville
designation expires in about two and half years on September 30, 2019 with a
few communities coming before and some of the newer zone designations coming in
the early 2020’s. Between now and the end of the year, I will be making the
case that zone designations at least be allowed to extend for a few years more.
I’m not necessarily going
to make the case for any new incentives- just for consideration on an
extension. I don’t think this is wholly unreasonable, at least not the way I
thought the 2011 gutting of the program was. Prior to 2011, 50% of the sales
tax revenue generated by each community’s certified business base was available
for projects in that zone.
But politics being what
they are and with a nasty hole in the state budget, urban communities were an
easy target. Never mind the fact that we were coming out of the worst recession
since the depression in the 1930’s; a hole is a hole is a hole.
But here’s the thing, some
or many of the state’s urban communities haven’t gotten out of that hole.
That’s a whole different discussion but the point is, the UEZ program was one
way to mitigate the challenges of competing in a fast-changing global economy.
With companies shifting to states with lower tax burdens or even overseas with
cheap labor- it was something.
Since 2011, several bills
have been sponsored to restore aspects of the program- such as a community’s
ability to fund zone-based projects- but those bills never got anywhere. Such a
thing would be useful because all of the challenges remain; but we have fewer
resources to face them.
Now it’s simply about
extending the zone designation so that businesses in urban communities can
continue to offer something that non-urban communities can’t. I recognize that
the program, like most programs, can’t go on forever. But the conditions that
warranted the program in the first place are either still with us or they’ve
morphed into something worse.
Perhaps anchoring the
designation to some benchmarks may be a more fair approach than simply ending
it at a fixed point in time. Yet, even as I say that, I can the argument that
says if you haven’t improved things in the years since the designation was in
place, more time won’t help.
Maybe, but the chronic
nature of the struggles in urban communities are shaped by many forces and no
single program, whether UEZ or whatever, is going to be the deciding factor. It
takes a varied and diverse tool kit to
deal with “chronic” and Bridgeton- along with Newark, Camden, Trenton, and Plainfield
is about to lose one of those tools.
Then too, it may be time
for some new models. The inequality we see today is not just about wealth- it’s
also knowledge, technical chops, workforce skills. The landscape is changing
fast and when 82% of manufacturing companies report having technical openings
that they can’t fill, maybe the focus needs to be there. Maybe create an
entrepreneurial-focused program in these zones.
Change is necessary and as
far as UEZ, or what remains of it, about to expire, I would like to think that
it would be replaced with something else- something fitted for the 21st
century. For now though, I will work to try and get just a little more time not
just for Bridgeton, but for the other urban communities around the state that
will soon expire.