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S3564 FISCAL ESTIMATE
LEGISLATIVE FISCAL ESTIMATE
SENATE, No. 3564
STATE OF NEW JERSEY
222nd LEGISLATURE
DATED: JUNE 29, 2026
SUMMARY
Synopsis:
Establishes �New Jersey Private Contractor Registration
Act.�
Type of Impact:
Annual State expenditure and revenue increases.
Agencies Affected:
Department of Labor and Workforce Development; Division of
Consumer Affairs in the Department of Law and Public Safety.
Office of
Legislative Services Estimate
Fiscal Impact
Year 1�
Year 2�
Year 3�
Year 4�
State Revenue Increase
Up to $1,100,000
Up to $100,000
Up to $540,000
Up to $140,000
State Expenditure Increase
$2,100,000
$600,000
$600,000
$600,000
�����������������������������������
�
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.
Year 1
Year 2
Year 3
Year 4
Total
Licenses
New
4,400
400
400
400
5,600
Renewals
0
0
4,400
400
4,800
Fees
New
$250
$250
$250
$250
Renewals
$100
$100
$100
$100
Fees
by Category
New
$1,100,000
$100,000
$100,000
$100,000
$1,400,000
Renewals
$0
$0
$440,000
$40,000
$480,000
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.
Section:
Commerce, Labor and Industry
Analyst:
John Gaudioso
Associate Fiscal Analyst
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.).