SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO

SENATE, No. 2917

STATE OF NEW JERSEY

DATED:  JUNE 27, 2022

      The Senate Budget and Appropriations Committee reports favorably Senate Bill No. 2917.

      This bill provides that the recipients of tax credits under the New Jersey Aspire Program may carry forward unused tax credits during the seven privilege periods following the year in which the credits are awarded.

      Under current law, when a developer is awarded tax credits under the New Jersey Aspire Program, the developer may only carry forward unused tax credits in certain circumstances.  Specifically, the developer is required to demonstrate that the tax credits could not be claimed because the developer’s redevelopment project was directly impacted by a natural disaster, state emergency, national emergency, or other situation beyond the developer's control.  In these circumstances, current law allows the developer to carry forward the unused tax credit for up two years if the developer receives approval from the New Jersey Economic Development Authority (EDA). 

      Notably, the bill expands the circumstances in which a developer may carry forward unused tax credits under the New Jersey Aspire Program.  Under the bill, a developer would be permitted to carry forward any tax credits that cannot be claimed due to the value of the tax credits exceeding the amount of eligible tax liabilities against which the tax credits may be claimed.  The bill also provides that the EDA would no longer be required to approve the carry forward of tax credits.

      Additionally, the bill increases the period of time in which unused tax credits may be carried forward.  Specifically, the bill permits a developer to carry forward unused tax credits for use in the seven privilege periods following the privilege period for which the tax credits are awarded.

FISCAL IMPACT:

      The Office of Legislative Services concludes that the bill would result in a potential decrease in State revenue because the bill expands the circumstances in which a developer may carry forward unused tax credits under the New Jersey Aspire Program.  Specifically, a developer would be permitted to carry forward any tax credits that cannot be claimed due to the value of the tax credits exceeding the amount of eligible tax liabilities against which the tax credits may be claimed.  Although this provision would not impact the total value of tax credits that are awarded under the program, this allowance may increase the rate at which these credits are applied against actual tax liabilities and extend the State’s revenue loss over a longer period of time.  Accordingly, the bill may result in a potential decrease in State revenues.