(TRENTON) – Legislation sponsored by Assembly Democrats Sheila Oliver, Craig Coughlin, Marlene Caride, Benjie Wimberly and Annette Quijano to require a corporation qualifying for certain grant funds to repay the funds in full if it fails to uphold the grant terms was approved Thursday by an Assembly panel.
Under the bill (A-1108), a private corporation that violates the terms of its grant agreement with the state entity issuing a state development subsidy grant would be required to refund the grant in full. The amount of the refund collected would be used to fund property tax relief.
“While incentives may motivate a business to either locate or expand its current operations in New Jersey, the sole motivation of the state in providing such subsidies is the desire to create job opportunities for our residents and to grow our economy and state revenues,” said Oliver (D-Essex/Passaic). “This benefits everyone. When businesses do not live up to the terms of the subsidies, it represents an abuse of the taxpayer’s resources.”
“We want to create jobs and spark economic development, but we also want to do it responsibly,” said Coughlin (D-Middlesex). “These grants were issued with the expectation that they would lead to economic growth. There has to be some accountability to make sure that happens.”
“The purpose of these grants is to entice businesses to set up shop in New Jersey and to grow their businesses in New Jersey,” said Caride (D-Bergen/Passaic). “Corporations that are receiving and benefitting from these grants have to live up to their promise to generate employment. We need to ensure that New Jersey’s taxpayers receive the full benefit of the bargain. This bill advances that mission.”
“The state doesn’t have money to waste,” said Wimberly (D-Bergen/Passaic). “These funds were distributed with a mission in mind. It is critical that corporations receiving grants fulfill their responsibility to the taxpayers who fund these grants by holding up their end of the bargain.”
“Any business that receives taxpayer dollars owes it to the people of New Jersey to manage those funds prudently,” said Quijano (D-Union). “This legislation builds upon the basic idea that the efficient use of public money must be a priority.”
To effectuate the refund requirement, the bill requires the public entity issuing the grant to include provisions for the refund as part of the grant agreement. The bill authorizes a public entity in an action to collect the subsidy grant refund plus attorney fees and other costs of collection. The bill requires the amount of any refund, attorney fees, and other costs collected by a public entity to be paid to the State Treasurer and used to provide property tax relief.
While the New Jersey Economic Development Authority, the primary issuer of development subsidy grants, generally includes provisions permitting partial refunds in its grant agreements, at present there is no requirement for a full refund in the event of violation of an agreement’s terms.
The bill was approved by the Assembly Commerce and Economic Development Committee.