For immediate release
December 21, 2011
Contact
Fred Kenney, Executive Director, Vermont Economic Progress Council Agency of Commerce and Community Development
fred.kenney@state.vt.us
802-828-5256, 802-777-8192 (cell)
Employers to create 988 new jobs over five years
MONTPELIER – The Vermont Economic Progress Council authorized $8.3 million in incentives under the Vermont Employment Growth Incentive (VEGI) program in 2011, which will encourage the creation of 988 new jobs in Vermont.
The Vermont Economic Progress Council met throughout the year to review and authorize the incentives. No incentives are paid when the companies are authorized. The authorization means that the companies met statutory requirements to be authorized to earn a certain level of incentives.
Overall, these projects will create 988 new jobs and about $40 million in new payroll for Vermonters, and the companies will make $302 million in capital investments in Vermont, between 2011 and 2015. The jobs must be new, full-time, permanent, non-owners, and pay more than 160 percent of the Vermont Minimum Wage (about $13.04/hour) and provide benefits.
“In the end, there are well-paying jobs with benefits for Vermonters, there is investment in new facilities and machinery and equipment to keep Vermonters competitive, and there is $8 million in new tax revenues to support other state programs,” said Lawrence Miller, Vermont’s secretary of Commerce and Community Development.
To earn the incentives, authorized companies must meet payroll, employment and capital investment performance requirements each year between 2011 and 2015. If earned, the incentives would pay out to the companies over nine years between 2012 and 2020, only if the performance requirements are maintained.
The Council approved the applications after reviewing nine “quality control” program guidelines and applying a rigorous cost-benefit analysis that calculates the level of new tax revenue a project will generate for the state. The model estimates that the economic activity approved will generate $7.7 million in new tax revenue, even after payment of the incentives.
The Council also determined that these projects would not occur or would occur in a significantly different and less desirable manner (the “but for” test) if not for the incentives being authorized.
“We determined that these projects would not have occurred in Vermont or would have occurred in a way that generated far fewer tax dollars,” said Stephan Morse, VEPC Chairman. “Instead, the projects will occur and if the companies meet their performance requirements, they will generate enough new tax revenue to the state to pay the incentives that are earned and still generate almost $8 million in new tax revenue for Vermont.”
Included in the $8.3 million authorized were incentives totaling about $1.7 million in “Green” VEGI incentives for companies that will create jobs in environmental technology sectors. These companies plan to develop and produce recyclable or biodegradable containers, develop and operate an integrated energy/food production facility; produce energy efficient turbo-machinery, and build a wind testing facility.
The following is a list of those companies authorized for VEGI incentives in 2011:
ALPLA, Inc., Essex, $654,438
Bariatrix Nutrition Corp, Georgia, $135,653
eCorporate English, Ltd, Middlebury, $464,731
WCW, Inc., Manchester, $512,449
Vermont Smoke and Cure, Hinesburg, $156,913
Carbon Harvest Energy, Burlington, Brattleboro, $568,913
Concepts NREC, Wilder, $290,335
SOH Wind Engineering, LLC, Williston, $153,995
Green Mountain Coffee Roasters, Essex, $4,696,809
Ellison Surface Technologies, Inc., Rutland, $688,462
Total: $8,322,698
The Vermont Economic Progress Council is an independent board consisting of nine Vermont citizens appointed by the governor, and two members appointed by the House of Representatives and the Senate, that considers applications to the state’s economic incentive programs.
The Council is attached to the Vermont Agency of Commerce and Community Development, whose mission is to help Vermonters improve their quality of life and build strong communities.
Permalink |
This latest award means that taxpayers have given Green Mountain Coffee Roasters (GMCR) almost $9 million in the last eight years. Yes, nine million dollars.
By all accounts, GMCR is a fine company and a good employer. I’m not picking on them (and I don’t blame them); they’re just the elephant in the room.
GMCR’s latest filing with the SEC reported that the company had $201 million in net income last year. That’s a lot of money and it makes you wonder if they need our help.
Mr. Kenney said that VEPC applied “a rigorous cost-benefit analysis” before deciding on the awards. Actually, one part of the analysis is deeply flawed.
To determine how many jobs will qualify for the incentive, VEPC uses a background growth rate to avoid paying for jobs that would have been created anyway. That is, if all widget makers are growing at an annual rate of 2%, than all new jobs that exceed that rate are considered eligible. However, a successful company like GMCR may have been growing at 6% per year (I’m just making up numbers for this discussion).
So (for example),assume GMCR had 1000 jobs and promised to create 100 (a 10% increase). Using an industrywide 2% background growth rate, eighty jobs would be eligible for an incentive. But if GMCR’s actual growth rate was 6%, only forty jobs would be eligible. This makes a huge difference in the size of the award. The failure to fix this problem with the methodology has cost taxpayers millions of dollars over the years.
There is simply no justification for this and it’s especially inappropriate at a time when there are so many unmet needs. I can only imagine the outcry from some quarters if something like this was happening in a public assistance program for low-income families.
It’s way past time to fix this.