January 2013
At Issue, By David Brogan, First Vice President

After Sandy, Small Businesses Will Be Critical to Successful Recovery

We all saw the incredible devastation caused by Superstorm Sandy. We were all in shock at the scope and breadth of the damage. For many of us, it was on a level that was literally unimaginable. Then, our initial shock was followed by the realization that a recovery would need to take place. That dilemma left many unanswered questions.

For businesses, especially small businesses, the burden of rebuilding is daunting. Unlike homeowners, who qualify for Federal Emergency Management Agency (FEMA) grants to get them through the rough spots, businesses have to rely on disaster assistance loans. And for many small businesses the thought of incurring more debt is something that is simply not feasible.

NJBIA believes that the state and federal governments must provide a multi-faceted approach toward this recovery, providing businesses a multitude of options and incentives to survive and rebuild. It is critical that the recovery efforts focus on getting businesses back on their feet as quickly as possible. If not, it will cost the state economically in lost jobs, lost tax revenue and lost economic activity.

In October, just after the storm, NJBIA researched the recovery efforts and incentives utilized by other states and found a number of policies that would work well in New Jersey.

In Louisiana, for instance, a Gulf Opportunity Zone was created following Hurricane Katrina where businesses could avail themselves of special tax incentives. Among other things, taxpayers were allowed to deduct up to 50 percent of their clean-up costs. Also, certain small businesses saw their federal expensing limit double to $200,000 in qualifying property expenditures, and the phase-outs for the level of investment increased from $400,000 to $1 million, allowing more small businesses to use this tax benefit.

Businesses of all sizes affected by Katrina were allowed to take a special first-year depreciation deduction for qualified property placed in service after the storm. The special deduction was equal to 50 percent of the property’s depreciable basis, accelerating the typical structured depreciation schedule dramatically. Affected businesses were also allowed to carry back losses from taxes paid up to five years earlier instead of the normal two-year period.

US Rep. William Pascrell has already championed legislation for similar tax incentives for New Jersey businesses. And Senator Menendez has been outspoken on the need for grants for businesses.

Clearly, these modest tax incentives are the least we can do to help storm-ravaged businesses.

In our discussions with members, one thing has become clear: businesses need aid in the form of government grants. Disaster loans will help, but for many businesses, taking on more debt is not feasible. For some, grants will make the difference between rebuilding or not.

NJBIA has conveyed that message to both the state and federal governments, and that message has gotten through. The Christie Administration urged the president to include business grants in his request to Congress for Sandy disaster aid.

At NJBIA’s Public Policy Forum in December, the Governor announced $2 billion for grants to small businesses as part of an overall $60.4 billion aid package. (At press time, Congress had not yet voted on the aid request.)

While no one could have imagined the impact of the storm before it hit our state, we have to live with its aftermath. There is no telling how long the recovery will take or how many businesses will ultimately survive. But what is certain is that we must ensure that the businesses that are so critical to the economy are given the necessary tools to succeed. This is a good place to start.

Vincent Schweikert, Vice President & Publisher
973-882-5004. ext. 110
v.schweikert@njbmagazine.com

Anthony Birritteri, Editor-in-Chief
973-882-5004. ext. 104
a.birritteri@njbmagazine.com

George Saliba, Managing Editor
973-882-5004. ext. 106
g.saliba@njbmagazine.com

Lisa Fragati-Criscuolo, Advertising Manager
973-882-5004. ext. 108
l.criscuolo@njbmagazine.com

Gloria Owens, Account Executive
973-882-5004. ext. 109
g.owens@njbmagazine.com

Doug Prefach, Account Executive
973-882-5004. ext. 102
d.prefach@njbmagazine.com