Shumlin applauds economic incentives program

Governor Peter Shumlin spoke about H. 413 to residents of The Lodge and The Shores at Shelburne Bay. VTD Photo/Taylor Dobbs

Gov. Peter Shumlin speaking at The Lodge and The Shores at Shelburne Bay in May. VTD File Photo/Taylor Dobbs

Gov. Peter Shumlin says a new report shows the Vermont Employment Growth Incentives program has outperformed its job creation and state investment projections.

The 2012 annual VEGI report shows that participating businesses created 1,328 jobs from 2007 to 2010. Over that same period, the Vermont Economic Progress Council, the organization that oversees the program, has paid out $1.95 million in cash incentives. The state, as a result of the investments, has brought in $5.26 million in income tax revenue.

Shumlin said the jobs pay well, with wages at nearly $51,400 per year — well above the Vermont average annual wage of $37,619.

“The report shows that not only is the VEGI program helping to create jobs, but the kinds of higher jobs we want for Vermont,” the governor said.

Last spring, the governor and the Legislature extended the program another five years.

The companies applying for the incentives are mostly small businesses with fewer than 20 employees. Although the manufacturing industry once benefited the most from the program, incentives are now spread more evenly across other industries, like health care and information technology.

In order to qualify for cash incentives, companies participating in the VEGI program must prove that they have created new jobs. The annual report shows that at least 17 companies had their status under the program terminated, mostly between 2007 and 2009. Companies must meet the council’s approval, with criteria determining whether the firm’s economic activity would have happened without the incentive, and whether the company’s tax revenue will exceed the incentive paid out by the state, among other guidelines.

Green Mountain Coffee Roasters has received $1.7 million and is slated to get subsidies of $292,307 in 2013 and $4.69 million in 2015. Other companies that have received significant funding include Dealer.com, which stands to get $4.9 million over a three-year period. Much of the investment is returned to the state in the form of tax revenues.

VEGI was created in 2007 by the Douglas administration and the Legislature. The program is a refinement of the Vermont Economic Advancement Tax Incentives program, which began in 1996 when the state gave Husky Injection Molding $10 million to locate in Milton. VEGI is designed to require businesses to ensure they have created and maintained job targets.

Agency of Commerce Deputy Secretary Patricia Moulton Powden said the Shumlin administration has also created incentives for specialty training in science, technology, engineering and math. Powden also said the administration is guiding companies through the environmental permitting process.

Republican gubernatorial candidate Randy Brock said job incentive programs may make sense, but he argued that VEGI’s method for seeing whether a company would have created those jobs without the incentive is flawed.

“With the ‘but for’ provision as it is right now, that is effectively not clearly vetted by the people overseeing it,” said Brock. “I’m very concerned about the structure of that program, and that [‘but for’] I think is a weak link in it.”

Shumlin also defended the statistic he’s been using on the campaign trail for the total number of new workers who have been hired by Vermont firms over the last two years. VTDigger and Seven Days gave the governor’s claim a “mostly false” rating in its weekly Fact Checker column on Wednesday.

The governor said his original 7,500 figure included temporary workers, like school bus drivers and cafeteria workers, whose numbers always fall during summer months, as they lose employment briefly.

“We’ve grown 4,700 new jobs – that’s a great story to tell,” Shumlin said. “What the number reflects is this simple fact: We were using a non-seasonably adjusted number.”

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