ASSEMBLY APPROPRIATIONS COMMITTEE

STATEMENT TO

ASSEMBLY, No. 5170

with committee amendments

STATE OF NEW JERSEY

DATED:  May 15, 2025

      The Assembly Appropriations Committee reports favorably and with committee amendments Assembly Bill No. 5170.

      As amended and reported, this bill requires the Director of the Division of Taxation in the Department of the Treasury (director) to purchase unused tax credits awarded under the New Jersey Aspire Program (Aspire Program) and the Cultural Arts Incentives Program.

      Under current law, the director is permitted to purchase unused tax credits awarded under various economic development programs established under the “New Jersey Economic Recovery Act of 2020,” including the Aspire Program and the Cultural Arts Incentives Program.

      Under the bill, the director is required to purchase unused tax credits and tax credit transfer certificates awarded under the Aspire Program and the Cultural Arts Incentives Program in an amount equal to 85 percent of the value of the tax credit, provided that certain conditions are met.  In both cases, the bill requires the issuance date of the tax credit certificate or tax credit transfer certificate to have occurred at least one year prior to the date of application to the director.

COMMITTEE AMENDMENTS:

      The committee amendments provide technical changes to the bill to update the underlying statute in light of a recent enactment of law.

FISCAL IMPACT:

      The Office of Legislative Services (OLS) concludes that requiring the State to purchase certain tax credits would result in indeterminate increases in State expenditures and State revenues over a multi-year period.  Absent an established history of State tax credit purchases, the direction and magnitude of the net fiscal impact cannot be reliably forecast because the net effect would depend on the specific circumstances of each individual tax credit purchase.

      If all tax credits issued through the New Jersey Aspire Program and the Cultural Arts Incentive Program were unused and purchases by the State at the required 85 percent of face value, the State would incur additional expenses of up to $6.7 billion.  Several factors are likely to reduce total State tax credit purchases below this maximum.

      Whenever the State would acquire an unused tax credit at the required 85 percent of face value that otherwise would have been redeemed at 100 percent of face value, the State would realize a revenue gain equal to the full amount of the tax credit and a net financial gain equal to 15 percent thereof.  However, requiring the State to buy a tax credit that would not be used otherwise would cause a net loss to the State equal to 85 percent of the credit’s face value.