Proposed Bill Would Use Sales Tax Revenues for Infrastructure

TRENTON, NJ-A proposal has cleared the state Senate Economic Growth, Agriculture and Tourism Committee that would use up to half of the sales tax revenues generated by certain retail properties to build the road, sewer, water and other infrastructure components needed to handle the new development.

Under the proposed legislation, eligible projects are those that cost more than $100 million. The way it works is that developers would estimate future sales, the state would calculate total sales taxes estimated to be generated, divide that in half, and instruct the state treasurer to issue 25-year bonds to pay for infrastructure improvements related to the project. The bonds would then be paid off as the projected sales taxes are generated.

A similar tax-increment financing proposal failed a few years ago because of fears it would benefit suburban and rural areas to the detriment of urban centers. This latest legislation has been drafted to be more inclusive of urban areas, according to co-sponsor Sen. Joseph Kyrillos (R-Ocean). “It could lure developers to distressed communities like Asbury Park and Long Branch, and it could benefit the proposed new arena in Newark. Forty-seven states have some form of TIF financing that they can use quickly to react to a major development project,” he says.