By Arthur Maurice
NJBIA First Vice President
NJPRO Board of Trustees Member

In his budget proposal, Governor James E. McGreevey has proposed slashing funding for the state's most successful job creation initiative, the Business Employment Incentive Program (BEIP). Given the Governor's commitment to "smart growth," this is one program he should spare.

The BEIP was started eight years ago to create jobs by giving companies a financial incentive to relocate to New Jersey or to expand their operations here. The program was New Jersey's answer to the spirited competition among states for new businesses. It has been an unqualified success. Since the program was started, 325 companies have enrolled in the BEIP program, and they have pledged to bring 75,000 new jobs to the state. Thousands of these jobs have already been created.

The Governor, citing the budget deficit, says we can't afford the program anymore. But killing this employment-expansion program at a time when the state most needs to create new jobs will be self-defeating. It will actually cost the state money. Here's why.

The BEIP program, unlike any other economic-development program in the state, pays for itself. In fact, it more than pays for itself. Under BEIP, the grants given to participating employers come from a portion of new state income taxes paid by the employees hired to fill the new jobs. No incentive grants are paid to employers until the full complement of new employees has been hired (at least 25 new jobs in cities; at least 75 jobs in other areas) and has worked for one full year.

Unless the Legislature votes to overturn the Governor's action, many of 75,000 new jobs the program has attracted will never materialize.

A study by the New Jersey Policy Research Organization shows just how important the BEIP program is to the state economy. One third of all companies receiving incentive grants are bringing jobs to New Jersey from states like Virginia, Texas, Arizona, North Carolina, Florida and Missouri. For years these states were stealing jobs from us.

These are largely high paying jobs in high-growth industries. They include high-tech manufacturers (semiconductors), pharmaceutical companies, distributors, research facilities, financial services companies, and technology enterprises. What will happen to these companies if the state reneges on its promise to deliver grants for jobs created?

The case of Barr Laboratories Inc. is instructive. Attracted by a BEIP grant, the drug manufacturer is planning to move its 145 employees from New York to Bergen County this summer. Upon learning that the grant is in jeopardy, a Barr spokesman said: "It (the grant) was one of the key reasons we chose New Jersey, and we would just hope they would deliver on the promise they gave to companies like Barr."

The BEIP program also meets one of Governor McGreevey's smart growth goals-steering development and high paying jobs to our cities and older suburbs. In fact, more than one-third of the new BEIP jobs being created are in urban areas, and they will pay an average of $51,000, 25 percent higher than average pay statewide.

Not just our cities, but every region of the state will benefit from the new jobs. Half of new BEIP employers are based in North Jersey, with the rest from Central and South Jersey. And most of these employers will be small businesses.

Job creation is only part of the overall economic benefit of BEIP. Every job that is created requires a job site, and the related facility and capital improvement spending is impressive. Along with the over $4 billion in new payrolls associated with BEIP, employers will spend an estimated $10 billion in construction, fit-up, and other related costs for new or expanded facilities. Counting both direct and indirect economic stimulus ascribable to BEIP, over $100 of activity is generated for every $1 of BEIP incentive.

Governor McGreevey is quick to criticize President Bush for his failure to create a short-term economic stimulus package that would aid struggling state and local governments. By eliminating BEIP, Governor McGreevey is guilty of the same failure. New Jersey needs jobs, economic growth and more tax revenues. New Jersey needs BEIP.

is First Vice President of the New Jersey Business & Industry Association, an affiliate of the New Jersey Policy Research Organization (NJPRO) Foundation and is also a member of the NJPRO Board of Trustees.