Law Prohibits Businesses in Default on State Loans from Receiving New Funds
(TRENTON) – Legislation Assembly Democrats Tim Eustace, Daniel R. Benson and Troy Singleton sponsored to help ensure that taxpayer funds aimed at retaining employers and spurring economic growth in New Jersey yield positive results has been signed into law.
The law (A-4413) prohibits the state from awarding economic development subsidies to any business in default on a previously awarded subsidy that was a loan or loan guarantee.
“Economic development subsidies have a role to play in restoring our economy and putting New Jersey residents back to work, but it’s important that they’re awarded to businesses that are in good financial standing,” said Eustace (D-Bergen/Passaic). “This common-sense law will help ensure that taxpayer funds are used most efficiently.”
The sponsors noted that while subsidies have the potential to promote a business-friendly atmosphere in New Jersey and make the state more competitive, the state has an obligation to issue the funds responsibly.
“With a jobless rate that remains higher than the national average, it’s critical for New Jersey to continue looking for innovative ways to keep businesses here,” said Benson (D-Mercer/Middlesex). “If a business has already mismanaged taxpayer money once before, barring it from eligibility for subsidies in the future is simply a matter of rightfully exercising fiscal prudence.”
“The intent of the law is to ensure that we are not providing an economic development grant or loan to businesses that have failed to meet their obligation,” said Singleton (D-Burlington). “It’s an additional safeguard intended to incentivize compliance.”