Gov. Peter Shumlin announced plans Monday to create a fund he said would allow the administration to respond quickly to keep businesses in Vermont and better compete for new ones.
Flanked by legislative leaders, business representatives and administration officials, Shumlin proposed the creation of a Vermont Enterprise Incentive Fund that would allow him to offer cash to companies to keep jobs in the state or to match offers from other states to attract new businesses.
If approved by the Legislature, the program will be funded by the first $4.5 million in surplus from the state’s fiscal year 2014 revenues. Another $500,000 in state surplus revenue would go to the Vermont Economic Development Authority’s Vermont Entrepreneurial Lending Program, where it would be matched by $1 million in federal money.
The new incentive program, coupled with the state’s conditional economic development programs, such as the Vermont Employment Growth Incentive (VEGI), will give the administration more ways to help businesses stay in Vermont, Shumlin said. The money will support companies in the research and development and technology sectors, he said.
“This will add a tool in our existing toolbox to retain jobs and create economic opportunities in Vermont,” Shumlin said at a news conference Monday.
Shumlin said the fund will give the state more flexibility and discretion in its negotiations with current and prospective businesses. Any incentive offered to a company would have to be approved by the state’s Emergency Board, which is made up of members of the Legislature’s money committees. There would be no other oversight for the program.
Senate President Pro Tem John Campbell said the Emergency Board would not act as a “rubber stamp.”
Campbell supports giving the administration “some authority so they can act quickly” when the Legislature is not in session.
Shumlin said the fund would mark the first time a Vermont governor has had the authority to offer incentives directly to companies considering a move into or out of the state.
“For example, if a company were going to come to Vermont or South Carolina and they had a piece of paper from South Carolina saying that this particular benefit was given to us by South Carolina … I would have the authority as governor to say ‘this isn’t all that much money, this makes the difference, I’m recommending we make this investment,” Shumlin said. “This tool will allow us to match that offer.”
The second part of Monday’s proposal would add $500,000 in General Fund surplus to H.736, an economic development bill proposed by Reps. Heidi Scheuermann, R-Stowe, and Paul Ralston, D-Middlebury. That would be combined with $1 million in federal money in VEDA’s entrepreneurial lending program to create a reserve fund to lower the risk of lending to start-up tech companies.
Scheuermann, who is weighing a run for governor this fall, said both measures are a step forward.
“Just in the past few weeks, hundreds of Vermont workers and their families have been devastatingly impacted by the recent plant closures and layoff announcement,” Scheuermann said in a statement. “And our hearts go out to them, but, so must our resources, so this initiative is welcome news. That said, I am hopeful that this announcement will put a renewed focus on economic growth efforts in general. … This kind of strategy has been missing for too long, and the results have been devastating.”
Money from the new Enterprise Investment Fund could only be awarded to companies “in unforeseen or extraordinary circumstances,” according to a news release from the administration, such as:
“… the acquisition of a large Vermont business at risk of relocation outside the state; an existing business in Vermont, which is a division or subsidiary of a multistate or multinational company, at risk of closure or a significantly reduced workforce; or a business considering Vermont for relocation or expansion.
“To be eligible for utilization of the Fund, the project must have a substantial statewide or regional economic or employment impact; investigated, been approved for, or have the potential to be approved for other state programs and incentives,” according to a news release from the governor’s office.
Shumlin said he was “cautiously optimistic” that FY 2014 revenues would exceed forecasts and provide money for the two new initiatives.
The incentive money would get first dibs on any surplus — before the budget “waterfall” which is divided between the rainy day fund (50 percent), a reserve to counteract federal cuts (25 percent) and an increase in the General Fund transfer to the Education Fund (25 percent). The Legislature made a commitment to make up for the rebasing of the transfer, which cost the Education Fund about $27 million in inflationary increases, or about 2.5 cents on the statewide property tax.
