LEGISLATIVE FISCAL ESTIMATE
[First Reprint]
ASSEMBLY, No. 3762
STATE OF NEW JERSEY
222nd LEGISLATURE
DATED: JUNE 30, 2026
SUMMARY
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Synopsis: |
Establishes "New Jersey Private Contractor Registration Act;" appropriates $1.5 million. |
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Type of Impact: |
Annual State expenditure and revenue increases. |
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Agencies Affected: |
Department of Labor and Workforce Development. |
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Office of Legislative Services Estimate |
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Fiscal Impact |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
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State Revenue Increase |
Up to $2,200,000 |
Up to $2,400,000 |
Up to $3,700,000 |
Up to $500,000 |
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State Expenditure Increase |
$2,100,000 |
$600,000 |
$600,000 |
$600,000 |
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· The Office of Legislative Services (OLS) determines that the bill will result in an increase in State revenue from licensing fees of up to $8,800,000 over a four-year period.
· The OLS finds that there will be additional administrative and staffing requirements related to the establishment of a new database along with additional human resources needed to manage the application process, provide levels of customer service related to licensure, and impose any penalties. These expenditure figures include $1.5 million in one-time costs for database integration and $600,000 of annual spending on additional full-time employee resources to administer the licensures and other program requirements.
BILL DESCRIPTION
This bill establishes the New Jersey Private Contractor Registration Act, which prohibits contractors and subcontractors from engaging in private construction work unless they are registered with the Department of Labor and Workforce Development. Under the bill, “private construction work” means all building or work on a building, structure, or improvement of any type, as well as related building or work on a building, done within the State under an express or implied contract on behalf of another entity or individual. Private construction work does not include “public work” as that term is defined in the prevailing wage law, or “home improvement,” as that term is defined in the Contractors' Business Registration Act.
The bill requires a private contractor to pay an initial nonrefundable annual registration fee of $500 to the department. The non-refundable registration fee for the second annual registration will also be $500. Upon successful completion of two consecutive years of registration, a private contractor may elect to continue paying $500 annually or may elect to pay a discounted $750 for a two-year registration. The bill provides that reduced fee schedules based upon an entity’s annual revenue or non-profit status may be prescribed by regulation.
The bill exempts private contractors that are registered as public works contractors under the Public Works Contractor Registration Act from the registration and fee requirements of the bill. Contractors who are registered pursuant to the Contractors’ Business Registration Act are exempt under certain circumstances. The bill provides for penalties and fines for noncompliance with its provisions, including the suspension of a contractor’s registration. The bill appropriates $1.5 million to the Department of Labor and Workforce Development to effectuate its purposes.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS finds that the bill’s provisions will increase State revenues from licensing fees by up to $8,800,000 over a four-year period.
The bill requires private contractors to register their businesses with the Department of Labor and Workforce Development. Private contractors are contractors who perform private construction work within the State under a contract with another entity or individual, but who are not registered as public works contractors. Home improvement contractors are exempt from the requirements of the bill if they: (1) solely perform remodeling or renovation work, roofing and siding, kitchen and bathroom renovations, flooring, painting, decks, patios, fences, window and door installation, residential repairs or alterations, demolition related to residential projects, or installation work at homes or small residential properties; and (2) are registered pursuant to the Contractors’ Business Registration Act. The OLS notes there is potential for significant overlap between contractors performing home improvement work, public work, and private contractor work, and estimates the universe of contractors not already required to register as roughly 10 percent of the existing home improvement contractor business.
Using the baseline of approximately 44,000 home improvement contractors currently registered with the Division of Consumer Affairs, the OLS estimates that 4,400 private contractors would fulfill the new registration requirements during the first year of the new requirements. A smaller number of new contractors in this category, estimated at 400 annually, would be required to register in subsequent years.
The bill imposes an initial annual fee of $500. Upon successful completion of two consecutive years of registration, a private contractor may elect to continue paying $500 annually or may elect to pay a discounted $750 for a two-year registration. The factors used to project the rollout of these fees, assuming full compliance, are expressed in the table below. The OLS assumes in this analysis that all private contractors will opt for the lower cost two year registration option when possible.
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Year 1 |
Year 2 |
Year 3 |
Year 4 |
Total |
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Licenses |
New |
4,400 |
4,800 |
800 |
400 |
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Renewals |
0 |
0 |
4,400 |
400 |
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Fees |
New |
$500 |
$500 |
$500 |
$500 |
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Renewals |
$750 |
$750 |
$750 |
$750 |
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Fees by Category |
New |
$2,200,000 |
$2,400,000 |
$400,000 |
$200,000 |
$5,200,000 |
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Renewals |
$0 |
$0 |
$3,300,000 |
$300,000 |
$3,600,000 |
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Total |
$2,200,000 |
$2,400,000 |
$3,700,000 |
$500,000 |
$8,800,000 |
The OLS finds that there will be additional administrative and staffing requirements related to the establishment of a new database along with additional human resources to manage the application process, provide levels of customer service related to licensure, and impose any penalties. The OLS uses the department’s estimate of $1.5 million, which was provided to the OLS for an earlier version of the bill, as the cost for database integration.
The OLS estimates that the ongoing aspects of the administrative implementation can be accomplished with five additional full-time employees, which generates annual spending of approximately $600,000. This figure is inclusive of the impact on expenditures related to the regulatory requirements to implement the new registration process.
The OLS notes that the bill exempts certain contractors and certain construction activities from the provisions of the registration and fee requirements of the bill. Additional analysis would be required to more accurately estimate the impact of these changes on the potential registration fee revenue.
Lastly, the OLS is unable to estimate the additional revenue that will be derived from penalties, as there is no predictive data available on the frequency of potential noncompliance with the bill’s provisions.
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Section: |
Commerce, Labor and Delivery |
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Analyst: |
Associate Fiscal Analyst |
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Approved: |
Thomas Koenig Legislative Budget and Finance Officer |
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).