A660

An Act concerning reviews of the State’s economic development incentives, supplementing chapter 24 of Title 52 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. The State Auditor shall, on or before July 1 next following the effective date of this act and on or before July 1 of every second year thereafter, publish a report on an audit of every program of the New Jersey Economic Development Authority (hereinafter, “authority”) that provides a private business with a grant, loan, or tax credit. The report and audit shall cover the two-year period ending on December 31 of the year preceding the date of its publication. The purpose of the report and audit shall be to enable an evaluation of the State’s return on the economic development incentives provided through the authority to private businesses.

b. The report and audit shall provide detailed information on grants, loans, and tax credits awarded by the authority and on the private businesses that received those grants, loans, or tax credits. The report and audit (hereafter, “report”) shall include a description of each authority program that provides a grant, loan, or tax credit to a private business. The report shall also include the following information about every grant, loan, or tax credit in excess of $1,000 that the authority shall have awarded after 2006 to a private business:

(1) the name of the private business that received the grant, loan, or tax credit;

(2) the amount of the grant, loan, or tax credit;

(3) a detailed description of any development project that the private business was required to complete in exchange for the grant, loan, or tax credit and the status of the project;

(4) the amount of any investment, in excess of the funds provided by the State, that the authority required the private business to make in exchange for the grant, loan, or tax credit and the amount invested by the private business;

(5) the number of jobs that the private business promised to create, retain, or relocate within the State in exchange for the grant, loan, or tax credit and the number of those jobs that were to be permanent or temporary;

(6) the actual number of jobs that the private business created, retained, or relocated within the State as the direct or indirect result of the grant, loan, or tax credit, whether those jobs were temporary or are permanent, whether those jobs still existed in this State at the conclusion of the reporting period, or at the conclusion during the reporting period of the term of any contract or agreement between the authority and the business, under which contract or agreement the grant, loan or tax credit was awarded, and the salary and benefits provided during the reporting period to the individuals who have filled those jobs;

(7) the total number of individuals employed by the private business in this State on the day it received the grant, loan, or tax credit, the total number of individuals employed by the private business in this State at the conclusion of the reporting period or at the conclusion during the reporting period of any contract or agreement referred to in paragraph (6) of this subsection, and whether the private business has engaged in any layoffs in this State since its receipt of the grant, loan, or tax credit;

(8) the amount of additional tax revenue, on an annual basis for each year since the grant, loan, or tax credit was issued, attributable to increases in the private business’s net income, sales, or workforce as the direct or indirect result of its receipt of the grant, loan, or tax credit, including, but not limited to, additional income tax withholdings from an employee in a job created by the grant, loan, or tax credit; and

(9) the use of a provision of law by the authority to recapture or reduce the benefits of any grant, loan, or tax credit awarded to a private business.

The report shall also include a summary of its findings and shall detail any trends, positive or negative, that could be utilized to improve the State’s return on the economic development incentives provided through the authority to private businesses.

c. The report shall highlight any information required by this section that the preparers of the report were unable to obtain through the authority and recommend any legislative changes that would allow the authority to collect that information.

d. (1) The Office of the State Auditor shall not itself prepare the report to be published pursuant to this section; rather, the State Auditor shall contract with an independent private entity to prepare the report. The entity awarded the contract shall have at least 10 years’ experience in the preparation of financial and performance audits of governmental units or their agencies and instrumentalities. The contract shall require that the audit portion of the report be conducted in accordance with generally accepted government auditing standards used by the federal General Accountability Office.

The authority shall provide the independent private entity with unfettered access to any authority documents, records and employees. The independent private entity shall be required by contract to maintain the confidentiality of any confidential information it obtains through the authority.

(2) The independent private entity shall not publish its report or any part thereof to, or discuss its findings with, any person other than the State Auditor and the Executive Director of the authority, to each of whom the independent private entity shall transmit a copy of the report. Upon receipt of the report, the State Auditor shall transmit a copy of the report to the Governor and, pursuant to section 2 of P.L.1991, c.169 (C.52:14-19.1), to the Legislature, and the State Auditor and the authority shall make the report available to the public through the Office of the State Auditor’s website and the authority’s website, respectively.

2. a. There is hereby established the “Legislative Task Force on Business Development Incentives.”

b. The task force shall study the effectiveness of the business development and retention incentives offer by the New Jersey Economic Development Authority.

c. The task force shall be comprised of 14 members, as follows:

(1) The chairpersons of the Senate Economic Growth Committee, the Senate Labor Committee, the Senate Budget and Appropriations Committee, the Assembly Commerce and Economic Development Committee, the Assembly Labor Committee, and the Assembly Appropriations Committee, or their respective successors;

(2) A member of the Senate Economic Growth Committee, a member of the Senate Labor Committee, and a member of the Senate Budget and Appropriations Committee, or of their respective successors, to be appointed by the Minority Leader of the Senate; and a member of the Assembly Commerce and Economic Development Committee, a member of the Assembly Labor Committee, and the Assembly Appropriations Committee, or of their respective successors, to be appointed by the Minority Leader of the General Assembly; and

(3) The Majority Leader of the Senate and the Majority Leader of the General Assembly.

d. The appointment of members of the task force under paragraph (2) of subsection c. of this section shall be made within 30 days of the Legislature’s receipt of the first report transmitted pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill). Vacancies in the appointed membership of the task force shall be filled in the same manner as the original appointments were made.

e. The task force shall hold at least one public hearing to take testimony regarding the findings of the report published by the State Auditor pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) within 30 days of the appointment of the task force members under paragraph (2) of subsection c. of this section.

f. The task force shall submit a report to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature, within 120 days of the Legislature’s receipt of the report published by the State Auditor pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill). The task force report shall summarize the findings of the State Auditor’s report and provide recommendations for revising or discontinuing any existing New Jersey Economic Development Authority program so as to improve the State’s return on the economic development incentives provided through the authority to private businesses.

g. The Office of Legislative Services shall provide such technical, stenographic, and secretarial assistance as may be required by the task force. The task force may also request the assistance and services of employees of any other State department, board, bureau, commission, task force, or agency as it may require and as may be available to it for its purposes.

3. This act shall take effect on January 1 next following enactment, and section 2 shall expire upon submission of the task force’s report to the Legislature.

STATEMENT

This bill requires a biennial audit of the economic development incentive programs of the New Jersey Economic Development Authority (“EDA”). The bill also establishes the “Legislative Task Force on Business Development Incentives” (“task force”).

This bill would expand upon on the existing reporting requirements in some EDA programs and allow the State to examine economic development incentives as a whole in order to identify the most effective forms of incentives.

The bill directs the State Auditor to hire a private entity every two years to audit the EDA’s programs and produce a report that provides information on every grant, loan, or tax credit awarded to a private business and the recipient issued after 2006 and in excess of $1,000. The report is required to include the following information:

(1) the name of the private business that received the grant, loan, or tax credit;

(2) the amount of the grant, loan, or tax credit;

(3) a detailed description of any development project that the private business was required to complete in exchange for the grant, loan, or tax credit and the status of the project;

(6) the actual number of jobs that the private business created, retained, or relocated within the State as the direct or indirect result of the grant, loan, or tax credit, whether those jobs were temporary or are permanent, whether those jobs still existed in this State at the conclusion of the reporting period, or at the conclusion during the reporting period of the term of any contract or agreement between the EDA and the business, under which contract or agreement the grant, loan, or tax credit was awarded, and the salary and benefits provided during the reporting period to the individuals who have filled those jobs;

(7) the total number of individuals employed by the private business in this State on the day it received the grant, loan, or tax credit, the total number of individuals employed by the private business in this State at the conclusion of the reporting period or at the conclusion during the reporting period of any contract or agreement referred to in paragraph (6) above, and whether the private business has engaged in any layoffs in this State since its receipt of the grant, loan, or tax credit;

(8) the amount of additional tax revenue, on an annual basis for each year since the grant, loan, or tax credit was issued, attributable to increases in the private business’s net income, sales, or workforce as the direct or indirect result of its receipt of the grant, loan, or tax credit, including, but not limited, to additional income tax withholdings from an employee in a job created by the grant, loan, or tax credit; and

(9) the use of a provision of law by the EDA to recapture or reduce the benefits of any grant, loan, or tax credit awarded to a private business.

The report shall also highlight any information the private entity was unable to obtain through the EDA and recommend legislative changes that would result in ability to obtain that information. Finally, the report shall include a summary of its findings and detail any trends, positive or negative, that could be utilized to improve the State’s return on the economic development incentives provided through the EDA to private businesses.

The bill also establishes the “Legislative Task Force on Business Development Incentives.” The task force membership is to be comprised of:

(1) The chairpersons of the Senate Economic Growth Committee, the Senate Budget and Appropriations Committee, the Assembly Commerce and Economic Development Committee and the Assembly Appropriations Committee, or their respective successors;

(2) A member of the Senate Economic Growth Committee and a member of the Senate Budget and Appropriations Committee, or of their respective successors, to be appointed by the Minority Leader of the Senate; and a member of the Assembly Commerce and Economic Development Committee and the Assembly Appropriations Committee, or of their respective successors, to be appointed by the Minority Leader of the General Assembly; and

(3) The Majority Leader of the Senate and the Majority Leader of the General Assembly.

The task force is directed to hold at least one public hearing concerning the State Auditor’s report and issue its own report that makes recommendations for revising or discontinuing any existing EDA program that would improve the State’s return on the economic development incentives provided through the EDA to private businesses. Once the task force has issued its report, its statutory authorization shall expire.