LEGISLATIVE FISCAL ESTIMATE

[First Reprint]

ASSEMBLY, No. 5534

STATE OF NEW JERSEY

221st LEGISLATURE

 

DATED: AUGUST 13, 2025

 

 

SUMMARY

 

Synopsis:

Authorizes imposition of penalties and forfeiture of economic development subsidies for certain businesses that violate State environmental laws.

Type of Impact:

Indeterminate net impact on State finances.

Agencies Affected:

Department of Environmental Protection.

Department of the Treasury.

New Jersey Economic Development Authority.

 

 

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 and severity of environmental incidents.

 

·         The OLS estimates that the State could realize an indeterminate increase in revenue from any penalties collected pursuant to the bill.  However, the State may incur additional expenditures in indeterminate amounts related to costs associated with enforcing the provisions of the bill.

 

·         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 payments will be used to make payments to residents impacted by environmental incidents 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 authorizes the Department of Environmental Protection to issue administrative orders, levy administrative penalties, bring civil actions for injunctive relief, and bring an action for civil penalties to enforce the bill’s provisions.  The bill permits the department to assess a civil penalty not to exceed $100,000 per day for violations of administrative or court orders issued pursuant to the bill. 

      The bill provides that if the department determines that a recipient business is responsible for an environmental incident, the business may be required to make a payment to the State equal to the greater of: (1) 20 percent of the economic development subsidies awarded to the business 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 the 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 structures, and the cost 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, which enters into an agreement with the Economic Development Authority for the issuance of an economic development subsidy on or after the effective date of the bill, fails to make a payment to the State or forfeit the required amount of economic development subsidies, then the recipient business would be required to forfeit all economic development subsidies awarded to the recipient business until the requirements of the bill are satisfied.

      The bill takes effect on the first day of the sixth month following enactment and applies to economic development subsidy agreements entered into by the authority and recipient businesses on or after the effective date.

 

 

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 total amount of payments and penalties received by the State, the total amount of payments made from the Environmental Incident Recovery Fund, the value and type of economic development subsidies forfeited by recipient businesses, and the total amount of additional costs associated with enforcing the provisions of the bill.

      The State will experience an increase in revenues from the receipt of payments from recipient businesses.  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 may be offset by an increase in State expenditures.  The State could also realize an indeterminate increase in revenues from any penalties collected pursuant to the bill.  To the extent that the State incurs additional expenditures to administer the bill or enforce its provisions, 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 recipient business forfeits tax credits, then the State would experience an increase in revenues because the recipient business would be prevented from applying their tax credits against future tax liabilities.

 

 

Section:

Revenue, Finance, and Appropriations

Analyst:

Scott A. Brodsky

Staff Fiscal and 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.).