Editor’s note: This piece is by Sen. Susan Bartlett, chair of the Senate Appropriations Committee and a Democratic candidate for governor.
It’s only the second week and already there are no shortages of topics of intense debate. I want to talk about VEGI incentives and the request to the Emergency Board to raise the cap on these incentives. If VEGI, the Emergency Board and raising the cap mean nothing to you, I would say you are with at least 95% of the rest of Vermont, but it is an important issue and it does have advocates and naysayers.
VEGI stands for Vermont Employment Growth Incentive and is a program that was started several years ago to encourage job growth in Vermont through cash incentives to employers. The Emergency Board is the group that officially accepts the revenue projections, sets the levels of bonding and can approve emergency spending. The Board is made up of the governor, the chairs of the two appropriations committees and the chairs of the tax committees.
Each of the incentive programs that we have in Vermont has a “cap”. That is the dollar amount that the program may spend or commit. VEGI had a cap of $10 million and they have asked to have the cap raised to $25million.
Here’s how the VEGI program works. A business comes to the group in charge of these incentives and files an application for a VEGI credit. The business has to fill out a lengthy application and has to swear that the job growth would not happen without this incentive. There is a complex formula that determines if this would be a good investment of state dollars.
These are performance based incentives. In other words, until the company has created the jobs, the jobs have been filled and folks have been working for a specific time period, the incentive is not paid.
If the company never creates the jobs, or only creates some of the jobs, the incentive is adjusted accordingly. These incentives are also paid out over a period of years. The idea is that these new jobs create more revenues for the state, so these incentives don’t “cost” the state money, they just share some of the new revenues with the company that creates these new revenues.
The VEGI program currently has the authority to commit up to $10 million in incentives and has most of that money committed. They have so far only paid out under $1 million, but the potential liability is still there for the other $9 million.
Three companies have suddenly come forward with very good applications and are looking at the creation of over 800 jobs in a several year period.
One company is a large Vermont company who is looking for a major expansion and another is a company that to be built in Vermont and would manufacture solar panels. The cap on the VEGI programs needs to be raised to cover these potential new, high paying jobs.
It is important to understand that these caps are the state’s liability and never have we come close to actually paying out the full amount of the caps. The business community feels that these types of incentives are very important to job creation. Many others feel that most of the jobs grown in Vermont happen without these incentives and that there is no proof that these incentives are helpful.
I’m happy to encourage 800 good paying jobs with VEGI, what a great thing to be talking about! 800 good jobs!
