When it comes to collecting the payroll tax from scofflaw construction companies and developers, Jersey City doesn’t have to go after them, 2025 mayoral candidate Bill O’Dea says. Just wait from them to come to you.
O’Dea, the longtime Hudson County Board of Commissioners member who represents the southwest section of the city, says the city should deny permits and certificates of occupancy to contractors and developers who haven’t paid their payroll tax obligation.
“While I share the concern that businesses are not paying the taxes owed, the problem with collecting payroll taxes on construction projects is more severe,” he said after a Jersey Journal story Sunday in which city Councilman James Solomon pointed out that only six of 202 contractors in the city were registered under the payroll tax ordinance.
O’Dea said he raised the issue about the tax not being paid on a Grand Street project more than a year ago. “I still don’t know the disposition of that inquiry. There is an inherent flaw,” O’Dea said. “The city has almost no staff collecting the tax because they can’t recoup their costs.”
The payroll tax, 1% on Jersey City businesses, was created in 2018 to raise funds for the school district after the state announced a plan to cut $285 million over seven years from the district’s state aid allocation. Employers with a quarterly gross payroll of less than $2,500, charitable organizations and federal, state, county and municipal agencies are exempt from the tax.
City officials have claimed since the law’s inception that the state has failed to provide the tools and data for Jersey City to monitor businesses and collect the payroll tax. Currently the city operates for the most part, under the “honor system.”
“It’s even easier with construction projects to enforce collection,” stated O’Dea, “since the builder needs both a permit and a certificate of occupancy.”
Jersey City officials and Solomon did not immediately respond to a request for comment on O’Dea’s plan. O’Dea is one of four announced candidates to succeed Mayor Steve Fulop, who’s running for governor, in 2025. Solomon, who represents Downtown Jersey City, has said he is considering running for mayor.
Under O’Dea’s proposal, anyone who submits a permit application who is required to pay payroll taxes, must submit with the application an “estimate” of their payroll tax liability. The law would need to be amended so that no certificate of occupancy can be given until the builder/developer demonstrates that the payroll tax payment has been made, he says.
Additionally, O’Dea argued, all subcontract agreements by builders must include a condition that the subcontractor is aware of the payroll tax law requirements and has received a copy of the law.
“With the construction boom we have lost and are losing tens of millions of dollars” noted O’Dea, “The city should also immediately look at all certificate of occupancies given in the last three years for projects exceeding $10 million in cost and verify that payroll taxes were made.”
