Development subsidies; recapture; rescission
Under SB 1679, granting bodies that award development subsidies are mandated to perform due diligence, including cross-checking job creation and performance data of recipient corporations against reliable records, like unemployment insurance data. The bill also stipulates that any development subsidy must have clear purpose statements including estimated job creation numbers and economic returns, intended to protect public interests. In cases where corporation recipients fail to meet their job creation obligations, provisions for recapture or rescission of the subsidies come into play, effectively allowing the state to reclaim financial assistance based on underperformance.
Senate Bill 1679 aims to amend Title 41 of the Arizona Revised Statutes by introducing regulations regarding development subsidies. This bill establishes clear definitions, including what constitutes a 'development subsidy', which is any public expenditure exceeding $25,000 intended to boost economic development within the state. This encompasses a range of financial supports like grants, loans, tax reductions, and other incentives provided to corporations. The bill emphasizes accountability and performance measures tied to the subsidies awarded.
Notably, the bill introduces stringent obligations for recipient corporations regarding job maintenance. For instance, if a recipient corporate entity fails to meet its job creation or wage commitment within two years, or does not sustain these commitments for a period of five years, it could face reductions in subsidy or even sanctions. Such measures indicate a regulatory shift aimed at ensuring that public funds allocated for economic development yield tangible benefits. Opponents, however, may argue that these requirements could deter corporations from accepting subsidies due to the increased compliance burden and risk of financial penalties.