TRENTON, N.J. – The Assembly voted to advance Assemblyman Jay Webber’s bill (A492) creating a standard definition of default across all loan programs to prevent the state from awarding additional subsidies to companies with a history of failing to pay.
Current law prohibits the state from awarding a new subsidy when a company is in default on a prior subsidy loan. But that statute does not explicitly spell out a timeframe of what actually constitutes default on an unpaid loan, so the state has had to find ways to declare defaults in the absence of a definition. Webber’s bill defines default at a period of 24 months.
“Economic development in New Jersey does not come from doubling down on the mistakes of the past. We need to restore accountability and fairness to the economic subsidy programs in our state,” said Webber (R-Morris). “Defaulting companies should not get to draw from the well again when they have not lived up to the terms of prior commitments to taxpayers.”
Under the new definition, if a company has not paid principal and interest on an outstanding subsidized loan for a period of two years, that company will be officially and definitively in default and thus ineligible for a new loan or subsidy from the state.
Other sponsors are Speaker Craig Coughlin and Assembly members John DiMaio, Eric Houghtaling, Nancy Pinkin, and Clinton Calabrese.