Representatives from three companies planning to expand — a manufacturer, a value-added food company, and a digital mapping company — told a legislative panel that enhancements to the state’s cash incentive program might entice them to hire people in Vermont.
The House Commerce and Economic Development Committee is reviewing S.138, which includes changes to the Vermont Employment Growth Incentive, an economic development tool that provides cash incentives to companies that create jobs in Vermont.
The Shumlin administration wants to lower the wage threshold for workers in areas of the state with higher than average unemployment.
Also under new proposed rules, the Emergency Board could raise the $1 million cap incentives for qualifying companies that would create jobs in high-unemployment areas.
At a hearing on Thursday, representatives from the state’s 12 regional development corporations said they supported the changes to VEGI. A labor union lobbyist opposed the lower wage threshold, and a member of the public questioned the entire economic development bill.
Brenan Riehl, the CEO of GW Plastics, testified that his company is considering an expansion of operations in Vermont, Arizona or Texas. He told House Commerce the company wants to make a decision in the next two months.
“The question we have not answered yet is, ‘Where are we going to put that business?’” Riehl said. “The enhanced VEGI program would provide GW [Plastics]
with a very meaningful incentive to expand in Vermont.”
Riehl said the company would need to build a new facility to expand in Vermont, and complying with Act 250 has never been a problem. The company, headquartered in Bethel, pays entry-level employees $12.50 per hour, plus benefits, and offers cost-of-living increases and other training programs. The precision injection molding company also has operations in Royalton, Vermont; San Antonio, Texas; Tucson, Arizona; Querétaro, Mexico; and Dongguan, China, according to a 2013 press release from GW Plastics.
In an interview, Riehl said GW Plastics has a “soft spot” for Vermont because the company’s regional headquarters is here. But he said the state does not have a comparative advantage in terms of property taxes, utility prices, workers compensation insurance and customer base.
Dan Adams, runs Maponics in White River Junction, a custom mapping service for companies.
Adams told House Commerce that it would be less expensive for his company to move across the border to New Hampshire — but he said Maponics would rather grow in Vermont.
“Frankly, when we do the math, moving to New Hampshire makes some sense,” Adams said. “The VEGI program itself tips the scale. It allows us to tell our employees that not only is [Vermont] a great place to be … but we’re in an environment where the state is helping us invest in you.”
“We’re not looking for anything but a commitment from the state of Vermont to help us get to where we want to go,” Adams said.
David Mickenberg, from the labor union coalition Working Vermont, testified against a change that would let the Economic Progress Council give incentives to more low-wage jobs in areas with higher-than-average unemployment.
“Specifically, our concern is around lowering the threshold for the wages,” Mickenberg said. “The economic development we should be encouraging should also be acknowledging the important part that workers play in our economy.”
Mickenberg said, “The idea that we would be lowering the threshold and then have folks turn to public assistance is something that concerns us.”
Margaret Murray, a resident of Montpelier, questioned whether cash incentives should go to businesses at all. She asked why original provisions of the bill would take effect retroactively.
“It almost sounds as if promises were made before they could be promised,” Murray said.
Joan Goldstein, the state’s new commissioner of the Department of Economic Development, compared VEGI’s cash incentives to a rebate for businesses that prove to the state that they have created new jobs.
Goldstein said cash incentives are higher for jobs that pay higher wages. That means companies would be encouraged to pay employees more under the program, she said.
Rep. Maureen Dakin, D-Colchester, said the testimony changed her mind on the wage threshold issue.
“I’ve heard enough testimony to realize that what works in the Chittenden County area just doesn’t work in the rest of the state,” Dakin said. “I’m on board now.”
The companies that testified before House Commerce have not yet been approved for the VEGI program, according to a spreadsheet current through April 6 from the Agency of Commerce and Community Development.
The VEGI program was created in 2007 after a series of reports from state auditors and a Wall Street Journal investigation in 2000 condemned the Vermont Economic Progress Council for providing cash to companies without sufficient oversight. The precursor to VEGI was the Economic Advancement Tax Incentive, or EATI.
