LEGISLATIVE FISCAL ESTIMATE
SENATE, No. 3564
STATE OF NEW JERSEY
222nd LEGISLATURE
DATED: JUNE 29, 2026
SUMMARY
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Synopsis: |
Establishes “New Jersey Private Contractor Registration Act.” |
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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; Division of Consumer Affairs in the Department of Law and Public Safety. |
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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 $1,100,000 |
Up to $100,000 |
Up to $540,000 |
Up to $140,000 |
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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 $1,880,000 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.
· The department provided informal fiscal information related to the bill’s impact. This included an estimate of 25,000 to 30,000 new licensees and up to 14 additional employees to support the program. The OLS analysis estimates a significantly lower license volume and a concomitant reduction in revenues.
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 non-refundable registration fee of $250 to the department. Upon completion of an initial two-year registration, a private contractor is thereafter required to register for a two-year period and pay a non-refundable registration fee of $100. The bill provides that reduced fee schedules based upon an entity’s annual revenue or nonprofit status may be prescribed by regulation. Further, 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. The bill provides for penalties and fines for noncompliance with its provisions, including but not limited to the suspension of a contractor’s registration.
FISCAL ANALYSIS
EXECUTIVE BRANCH
The Executive has not submitted a formal fiscal note for this bill. However, the Department of Labor and Workforce Development provided informal fiscal information on the impacts of the bill.
The department anticipates an initial one-time technology budget of $1.5 million for integration of the registration and licensing process into the Wage and Hour Automated Tracking System or for the creation of a separate database. The department anticipates needing up to 14 new full-time employees to review applications, handle denials or revocations, and manage complaints related to the registration and penalty process. The approximate annual cost for this increased staffing is estimated by the department to be in the $1.6 to $2.0 million range for salary and benefits.
The department estimates the number of contractors who will register to be between 25,000 to 30,000, with licensing fees of between $2 to $4 million annually. This registration estimate assumes that the number of private contractors could equate to nearly 70 percent of the home improvement contractor market, which is significantly higher than the OLS assumption and leads to higher expected annual expenditures by the department.
The department also notes that given the infrastructure, hiring, and training requirements, there will be an estimated 12 to 18 months of lead time necessary to fully implement the bill’s provisions.
OFFICE OF LEGISLATIVE SERVICES
The OLS finds that the bill’s provisions will increase State revenues from licensing fees by up to $1,880,000 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 home improvement contractors or public works contractors. 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. This estimate for contractor registration is significantly lower than the one provided by the department.
The bill imposes an initial two-year fee of $250, followed by a two-year renewal of $100, for a total of $350 over a four-year cycle. The factors used to project the rollout of these fees, assuming full compliance, are expressed in the table below.
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Year 1 |
Year 2 |
Year 3 |
Year 4 |
Total |
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Licenses |
New |
4,400 |
400 |
400 |
400 |
5,600 |
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Renewals |
0 |
0 |
4,400 |
400 |
4,800 |
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Fees |
New |
$250 |
$250 |
$250 |
$250 |
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Renewals |
$100 |
$100 |
$100 |
$100 |
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Fees by Category |
New |
$1,100,000 |
$100,000 |
$100,000 |
$100,000 |
$1,400,000 |
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Renewals |
$0 |
$0 |
$440,000 |
$40,000 |
$480,000 |
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Total |
$1,100,000 |
$100,000 |
$540,000 |
$140,000 |
$1,880,000 |
The OLS compared this private contractor fee structure to the existing home improvement contractor registration fee requirements. This bill would require two separate fees over a four-year cycle, representing a total of $350 fees in that cycle. The existing home improvement contractor fees of $110 for the first year and $90 in each subsequent year, result in a total of $380 over a four-year cycle. It is unlikely that this $30 difference would drive any significant behavior change favoring one contractor registration classification over the other. The OLS assumes that the business motivations to classify as a private contractor would remain in approximately the same proportions after the implementation of the bill.
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 as the cost for database integration.
Given that the OLS estimate for the volume of licenses
is significantly lower than the department’s estimates, the estimate for
additional resource requirements is also lower. The OLS estimates that the ongoing
aspects of the administrative implementation can be accomplished with
approximately 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.
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Section: |
Commerce, Labor and Industry |
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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.).