Lawmakers quietly approve $1 million for GlobalFoundries

Gov. Peter Shumlin joins GlobalFoundries officials to announce upgrades at the plant in Essex in 2015.

Gov. Peter Shumlin joins GlobalFoundries officials to announce upgrades at the plant in Essex in 2015.

Editor's note: This story was updated at 2:34 p.m.

A panel of high-ranking lawmakers voted Friday to give $1 million to GlobalFoundries, despite objections from 50 other legislators who questioned the hush-hush process that led to the appropriation.

The Emergency Board, which includes the four chairs of the Legislature’s money committees and Gov. Peter Shumlin as the chair, voted 3-1 to award the money at a Friday meeting that started at 8:30 a.m.

The Shumlin administration did not formally announce the meeting until sending out the governor’s schedule at 4:17 p.m. on Thursday, following his State of the State address. The agenda packet for the meeting was printed Dec. 29 but was considered confidential.

The agenda packet also warned the meeting would be held on the Fifth Floor of the Pavilion building. Instead, the meeting took place in the Statehouse in Shumlin’s ceremonial office.

The Vermont Enterprise Fund is a state cash allocation program for companies that is not tied to job creation targets. The governor decides who gets the money -- with the stamp of approval from the Emergency Board. Another program, the Vermont Employment Growth Incentive, is designed to reward businesses after jobs have been created. The Vermont Economic Progress Council determines which companies are eligible for the awards.

The Shumlin administration hoped to use the $4.5 million fund to convince IBM to stay in Vermont. But budget pressures and legislative changes depleted the Enterprise Fund to $2.1 million before the governor sought to use it. Then, as part of the 2015 omnibus economic development bill, the Legislature spent $425,000 on a first-time homebuyer program and a study on how to market Vermont as a good place to do business.

In October, the Emergency Board and the Shumlin administration gave $700,000 of the Enterprise Fund to GW Plastics and BHS Composites.

Friday’s $1 million appropriation to GlobalFoundries, which IBM paid $1.5 billion to take over the plant in 2015, leaves about $400,000 in the fund. Shumlin asked the Legislature to refill it this year.

The board made two major decisions at the meeting — to allocate $1 million from the Enterprise Fund to GlobalFoundries, and to reaffirm its $200,000 cash award to BHS Composites of Canada. BHS Composites’ name was kept secret and was made public for the first time at Shumlin’s Thursday speech.

In October, the Shumlin administration rejected a public records request from VTDigger seeking the name of the Canadian company, which was offered up to $694,711 from the Vermont Employment Growth Incentive over and above the Enterprise Fund award.

The $1 million in Enterprise Fund money for GlobalFoundries will be allocated in two payments of $500,000 as part of GlobalFoundries’ plan to invest $72 million in capital in the Essex plant. In November, Shumlin joined the company to announce that the company completed the first $55 million of those investments.

The board discussed the $200,000 appropriation to BHS Composites in a public meeting. When the group finished, Shumlin asked to go into an executive session, saying that discussing the GlobalFoundries deal would require them to disclose proprietary information.

Sen. Jane Kitchel, D-Caledonia, who chairs the Senate Appropriations Committee, told Shumlin she wanted to hear as much information as possible in a public meeting before going into executive session behind closed doors. Lawmakers then spent the entire meeting discussing the matter publicly.

“From my perspective, I can tell you that I suspect that since Gov. Snelling’s first term, one of the biggest fear of every governor … has been that our biggest employer, IBM, may choose not to manufacture, create, design chips in Vermont,” Shumlin said.

He said New York State has offered $14 million to GlobalFoundries to support the plants in Malta, New York, and Fishkill, New York. “We’re cannibalizing each other for jobs, the states,” Shumlin said. “I wish that weren’t true.”

Janet Bombardier spoke on behalf of GlobalFoundries. She said the company employs people from 97 towns and every county in Vermont except Essex. She said those people innovate new technology to make chips or other material that is later used to build any smartphone on the market.

Bombardier did not explicitly say that GlobalFoundries would leave the state without the money. She said she would “never” ask for as much money as New York is giving the company, but she told the panel “if you don’t worry about sustaining your economic engines” their budget problems will “get worse.”

“I am committed to finding you $5 million in operating costs to replenish your (Enterprise Fund),” Bombardier said. “It’s hard. It’s going to be emotional. But it’s what we do every day, and we’re willing to help state government do that.”

The day before, at the State of the State address, Shumlin announced that GlobalFoundries would participate in a mentoring program. Company officials said in an interview they would offer the program at no cost because it is part of their corporate mission to help people learn to write resumes and prepare for job interviews.

GlobalFoundries may also be up for sale, according to Bloomberg.

Emergency Board questions Shumlin’s secrecy

Rep. Mitzi Johnson, D-South Hero, is the chair of the House Appropriations Committee. She was the only Emergency Board member to vote “no” on the appropriation to GlobalFoundries.

“Needing to have some of this happen in a little bit of secrecy doesn’t feel comfortable at all to me,” Johnson said, “and I understand that there’s proprietary information (involved).”

She said that even though her committee is going through a public process to adjust the current fiscal year’s budget, “there are a lot of decisions being made in a vacuum without the ability to look even a little bit into the future to make decisions in, I think, a more informed process.

“I have quite a few constituents who work at GlobalFoundries,” Johnson said. “I would support state money to keep those jobs. There are a lot of things about this process that are making me really uncomfortable.”

Sen. Tim Ashe, D/P-Chittenden, said he voted “yes” because the money is being allocated in accordance with the purpose of the Enterprise Fund. Kitchel and Rep. Janet Ancel, the chair of the House Ways and Means Committee, also voted “yes.”

Ashe said “it’s no secret to many people” that he does not support the Enterprise Fund, but “it is the law of the land” and “it’s hard to see that this doesn’t fit the program expectations.”

Shumlin said: “Can I just throw out that I don’t like executive sessions? I like transparency. I’ve learned more in this conversation than I thought I could publicly.”

50 other lawmakers sign a letter

Ancel said the Enterprise Fund is “problematic.” She cited a letter from more than 50 lawmakers — including Democrats, Republicans, and Progressives — who asked the Emergency Board to put off voting on the appropriation.

Rep. Chris Pearson, P-Burlington, wrote the letter and urged his colleagues to sign it on Thursday afternoon. “We did it in about three hours,” he said.

Some of the decipherable names were Rep. George Till, D-Jericho; Sen. Richard McCormack, D-Bethel; Sen. Anthony Pollina, P/D-Washington; Rep. Patti Komline, R-Dorset; and Rep. Kurt Wright, R-Burlington.

The letter says: “We understand there is an (Emergency Board) meeting scheduled for tomorrow morning that includes an agenda item titled: Approval of the proposed allocation of the Vermont Enterprise Fund.

“While it is impossible for us to judge the merits of the proposal(s) before you — since this program is based on information considered to be proprietary — we do know that (the Joint Fiscal Office) estimates the Enterprise Fund balance to be about $1.4 million.

“Given that our 2016 budget adjustment pressures exceed $50 million, and given that pressures for the 2017 budget are likely to be even greater, we respectfully request that you table any decision to spend the remaining Enterprise Fund dollars at this time.”

Pearson said the $1 million is “out-of-scale” for GlobalFoundries, but the premise behind the letter was that giving “some award to an unnamed business seemed at least to raise questions.” He said the Enterprise Fund was presented in 2014 as an emergency fund, but two years later, it has not been completely spent down.

Pollina said he “was struck by the fact that again there was an unnamed company.” He said he disagrees with the existence of the Enterprise Fund.

“It is corporate welfare,” Pollina said. “It’s money that we use to try to lure corporations to do certain things when in fact they already have access to millions and millions of dollars.”

House Minority Leader Don Turner, R-Milton, also signed the letter. He said he supports the Enterprise Fund but thought there should have been some kind of public hearing since the Legislature is in session.

Rep. Francis “Topper” McFaun, R-Barre Town, also signed the letter. “If there’s a slush fund hanging around right now, in my opinion, that money should be used to alleviate this deficit,” he said.

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Erin Mansfield

About Erin

Erin Mansfield covers health care and business for VTDigger. From 2013 to 2015, she wrote for the Rutland Herald and Times Argus. Erin holds a B.A. in Economics and Spanish from the State University of New York at Stony Brook, where she also attended journalism school. Erin has worked in public and private schools across Vermont and interned in the U.S. Senate. She has been published by the Columbia Journalism Review and the Society of Professional Journalists. She grew up in Killington.


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