LEGISLATIVE FISCAL ESTIMATE

ASSEMBLY, No. 5534

STATE OF NEW JERSEY

221st LEGISLATURE

 

DATED: JUNE 24, 2025

 

 

SUMMARY

 

Synopsis:

Requires business that violates State environmental laws to forfeit economic development subsidies under certain circumstances.

Type of Impact:

Indeterminate net impact on State finances.

Agencies Affected:

Department of Environmental Protection.

New Jersey Economic Development Authority.

Department of the Treasury.

 

 

Office of Legislative Services Estimate

Fiscal Impact

Annual 

 

State Finances

Indeterminate Net Impact

 

 

 

 

·         The Office of Legislative Services (OLS) finds that the bill would have an indeterminate net impact on State finances.  The actual impact on State finances will be driven by the frequency of environmental incidents, the total amount of payments received by the State, the total amount of payments from the Environmental Incident Recovery Fund, and the value and type of economic development subsidies forfeited by recipient businesses.

 

·         To the extent that recipient businesses make payments for the costs incurred to address an environmental incident, the State will collect additional revenues.  However, these revenues will be offset by payments from the Environmental Incident Recovery Fund. 

 

·         The fiscal impact of a forfeiture of economic development subsidies will depend on the type of subsidy surrendered by a recipient business. 

 

 

BILL DESCRIPTION

 

      The bill requires a business that has been awarded an economic development subsidy by a State public body and is found to be in violation of the State’s environmental laws to forfeit a portion of the economic development subsidy provided to the business or provide a payment to the State.

      The bill provides that if the Department of Environmental Protection determines that a recipient business is responsible for an environmental incident, the business will forfeit the economic development subsidy or provide a payment to the State equal to the greater of: (1) 20 percent of the economic development subsidies awarded to the business recipient for the tax year in which a determination is made under the bill; or (2) the total costs to address the environmental incident.  Under the bill, these costs include costs of environmental remediation necessary to contain and remediate the impact of the incident, housing relocation costs for impacted residents, the installation of air filtration and fire suppression systems within impacted buildings or structures, and the costs of psychological or mental health counseling for impacted residents. 

      The bill requires any payments received by the State to be deposited into the Environmental Incident Recovery Fund established by the bill and appropriated to provide reimbursement payments to residents of communities impacted by an environmental incident for costs incurred to address the environmental incident.  The bill provides that if a recipient business fails to forfeit its economic development subsidy or provide a payment to the State, the recipient business is required to forfeit all economic development subsidies awarded to the recipient business until the requirements of the bill are satisfied. 

 

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      None received.

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS finds that the bill would have an indeterminate net impact on State finances.  The actual impact on State finances will be driven by the frequency of environmental incidents, the total amount of payments received by the State, the total amount of payments from the Environmental Incident Recovery Fund, and the value and type of economic development subsidies forfeited by recipient businesses.

      If a business chooses to make a payment to the State for the costs incurred to address an environmental incident, then the State will experience an increase in revenues.  The bill requires these payments to be deposited into the Environmental Incident Recovery Fund to support payments to residents of communities impacted by an environmental incident.  Accordingly, the increase in State revenues will be offset by an increase in State costs.  To the extent that the State incurs additional expenditures to administer the bill, it will experience an increase in costs.

      The fiscal impact of a forfeiture of economic development subsidies will depend on the type of subsidy surrendered by a recipient business.  For example, if a recipient business forfeits economic development subsidies in the form of grant payments, then the State would experience a reduction in costs.  Alternatively, if a business recipient forfeits tax credits, then the State would experience an increase in revenues because the business recipient would be prevented from applying their tax credits against their future tax liabilities.

 

Section:

Revenue, Finance, and Appropriations

Analyst:

Scott A. Brodsky

Staff Fiscal & Budget Analyst

Approved:

Thomas Koenig

Legislative Budget and Finance Officer

This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

 

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).