More than a dozen Urban Enterprise Zone administrators and officials testified on behalf of the program Thursday as the Assembly Commerce and Economic Development Committee explored the implications of its potential elimination.
Administrators from towns across the state, including Mount Holly, Kearny, Jersey City, Vineland and Newark told the committee of the program’s success in revitalizing downtrodden areas of their cities.
But John Perna, owner of Hamilton Building Supply in Mercer County had a different take on the program that he says unfairly treats businesses not in a UEZ.
Perna told the committee that customers are placing orders by phone with businesses inside a UEZ and having the goods delivered, which is against the program’s rules requiring orders to be placed in person and goods picked up at the location.
The sales tax break allowed in a UEZ makes Perna unable to compete.
“Customers come to me and ask if I can match the price of the supplier inside the UEZ, including the 3.5 percent sales tax,” he said. “Our margins are razor thin already so with the 3.5% there is no way.”
Perna said the program – and the urban areas it serves – would be more effective if the tax incentive was eliminated and everyone was forced to collect the state’s 7 percent tax. The additional $1 million per day in revenue could be funneled back into the distressed cities, creating the same economic development benefits while eliminating the disadvantage faced by businesses outside the UEZ.
“If you end the program, everyone is on the same playing field,” Perna said.
The Christie Administration has proposed defunding the program, while keeping the 3.5 percent tax break intact. The money that had funded UEZ would go into the state’s general fund.