TRENTON, N.J. – A bill sponsored by Assemblyman Jay Webber that would prevent companies in default from receiving additional state subsidies cleared the Assembly Commerce and Economic Development Committee today.
Current law prohibits the state’s 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.
This bill (A492) will revise the law to create a clear, uniform, and standard definition of default across all loan programs, setting default at a period of 24 months. So, under clarified law, 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.
“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. Economic development in New Jersey does not come from doubling down on the mistakes of the past,” said Webber (R-Morris). “This clear cut-off of subsidies to bad-faith actors improves the accountability and fairness of economic-subsidy programs in our state.”
Other sponsors of A492 are Speaker Craig Coughlin and Assembly Members Eric Houghtaling, Nancy Pinkin, and Clinton Calabrese.