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S4218 1R FISCAL ESTIMATE
LEGISLATIVE FISCAL ESTIMATE
[First Reprint]
SENATE, No. 4218
STATE OF NEW JERSEY
222nd LEGISLATURE
DATED: JULY 2, 2026
SUMMARY
Synopsis:
Establishes program in EDA to encourage employee ownership
awareness and provide funding and advisory support.
Type of Impact:
Annual increase in State expenditures.
Agencies Affected:
New Jersey Economic Development Authority; Department of
Labor and Workforce Development; Department of the Treasury.
Office of
Legislative Services Estimate
Fiscal Impact
Annual
State Expenditure Increase
Indeterminate
�
The Office of Legislative Services (OLS) estimates that this bill
will result in an indeterminate increase in annual State expenditures to the
New Jersey Economic Development Authority to administer and expand employee
ownership assistance activities.� The magnitude of the increase will depend
primarily on implementation decisions made by the authority.
�
The bill may also increase administrative expenses for the
authority.� These costs may include application review, contract approval and
monitoring, website maintenance, advisory committee support, and loan
underwriting and servicing costs.� The OLS anticipates that some of these costs
may be absorbed within the authority�s existing staff and resources.� However,
the bill may expand the scope of those activities beyond the existing Employee
Stock Ownership Plan Assistance Program, which is administered by the authority
and supported by a dedicated State appropriation of $2.7 million.
�
The revolving loan fund outlined by the bill may result in an
indeterminate State expenditure increase if State funds are appropriated or
authority funds are transferred to capitalize the fund.� Loan repayments,
interest, investment earnings, federal funds, and private contributions may to
some extent offset State costs.� Because the bill does not specify
capitalization amounts, loan limits, interest rates, repayment terms, or
expected loan volume, the fiscal impact of the revolving fund cannot be quantified.
BILL DESCRIPTION
����� The bill requires the authority to establish and
maintain the Employee Ownership Transition Program.� Under the program, the
authority is to, in part, provide financial assistance for employee ownership
feasibility study services conducted by eligible contractors in an amount equal
to the lesser of $35,000 or 90 percent of the approved cost of a feasibility
study performed by an approved contractor.� The bill also establishes
qualifications for eligible businesses to participate in the program and establishes
a nine-member Advisory Committee on Employee Ownership.�
����� Under the bill, the authority would be required to
establish and maintain the Employee Ownership Assistance Fund. �The authority
is required to maintain the fund to support the program, including the
provision of financial assistance to defray the costs of employee ownership
feasibility study services conducted by eligible contractors and the provision
of education, outreach, and technical assistance to businesses in accordance
with the purposes set forth in the bill. �This fund would be credited with such
monies as may be appropriated or made available to the authority for the
purpose of the fund and any return on investment of monies deposited in the
fund.
����� In addition, the bill codifies and expands the authority�s
Employee Stock Ownership Plan Assistance Program, which provides partially-covered
employee stock ownership plan feasibility study services for New Jersey
businesses that are interested in transitioning to employee-owned businesses. �Under
the bill, any eligible contractors that are approved under the existing program
would automatically qualify as eligible contractors for the program after
completing the required employee ownership feasibility study.
����� Finally, the bill requires the authority to establish
a non-lapsing revolving loan fund, to be known as the Employee Ownership
Revolving Loan Fund, to provide low-interest loans to support employee
ownership transitions. �Under the bill, the authority may issue low-interest
loans from the revolving loan fund to eligible businesses, participating
businesses, and any other entities determined to be appropriate by the authority,
for the purpose of facilitating: majority employee ownership transitions; and
reasonable transaction-related and post-transition needs that support the
long-term sustainability of an employee-owned business.� The bill also permits
the revolving loan fund to be credited with monies received by the authority
from various sources, including State appropriations, federal funds, charitable
contributions, internal transfers, and investment returns.� Notably, the bill
requires the authority to designate a qualified fund manager or financial
intermediary to provide advisory assistance to the authority in administering
the revolving loan fund.� In addition, the bill prohibits the authority from using
more than five percent of the total amount of interest or other charges
received each year in connection with issued loans to offset the administrative
costs of operating the revolving loan fund.
FISCAL ANALYSIS
EXECUTIVE BRANCH
����� None received.�
OFFICE OF LEGISLATIVE SERVICES
����� The OLS estimates that this bill will result in an
indeterminate increase in annual State expenditures to the authority to
administer and expand employee ownership assistance activities.� The magnitude
of the increase will depend primarily on: (1) the amount appropriated or
otherwise made available to the fund; (2) the number of eligible businesses
approved for feasibility-study assistance; (3) the amount of monies in the fund
used for education, outreach and technical assistance; (4) the cost of administering
the Advisory Committee on Employee Ownership; (5) and the amount, if any,
deposited into the revolving loan fund.�
����� The bill may also increase administrative expenses for
the authority.� These costs may include application review, contract approval
and monitoring, website maintenance, Advisory Committee on Employee Ownership
support, and loan underwriting and servicing costs.� The OLS anticipates that
some of these costs may be absorbed within the authority�s existing staff and
resources.� However, the bill may expand the scope of those activities beyond
the existing program, which is administered by the authority and supported by a
dedicated State appropriation of $2.7 million.� Additionally, the Department of
Labor and Workforce Development and the Department of the Treasury may
experience modest administrative costs associated with their participation in
the Advisory Committee on Employee Ownership.� However, the OLS estimates that
these costs may be absorbable within existing resources.�
����� The revolving loan fund outlined by the bill may
result in an indeterminate State expenditure increase if State funds are
appropriated or authority funds are transferred to capitalize the fund.� Loan
repayments, interest, investment earnings, federal funds, and private
contributions may to some extent offset State costs.� Because the bill does not
specify capitalization amounts, loan limits, interest rates, repayment terms,
or expected loan volume, the fiscal impact of the revolving fund cannot be
quantified.�
Section:
Authorities, Utilities, Transportation and
Communications
Analyst:
Michael D. Walker Jr.
Associate Fiscal 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.).