Earlier today, VTDigger broke the news that the state Emergency Board (four top lawmakers plus the Governor) had met on very (VERY) short notice to approve two state grants from the Enterprise Fund: $1 million to GlobalFoundries and $200,000 to BHS Composites. And I commented that this is the kind of thing that makes some see the Governor as a slippery dealmaker.
Well, here’s something you didn’t know. TheVPO has learned, as they say, that 50 state lawmakers wrote a letter to the Emergency Board asking it to postpone action on the grants.
The plea fell mostly on deaf ears, as the Board approved the grant on a 3-1 vote.
One of the letter’s signatories was Rep. Chris Pearson (P-Burlington). Via email, he explained the reasoning:
It was my hope that we could consider using the money to help fill the [FY 2017] budget gap or, more urgently, the [FY 2016] budget adjustment challenge.
The letter was written before the EB’s agenda had been publicly warned — which happened only yesterday afternoon. Pearson adds:
Now that it’s clear the money was for Global Foundries it’s puzzling how a company that was given $1.4 billion to take over the plant could find $1 million much of a game changer.
You and me both, but more on that in a moment. First, the political ramifications of this letter.
See, the Enterprise Fund was established in 2014 when rumors were rampant that IBM was about to close or severely cut back its Essex Junction facility. The bill, as I recall, was rammed through quickly and the Governor was given broad discretion in doling out EF grants.
The bill created the Enterprise Fund for a mere two years. It will sunset at the end of this fiscal year unless the Legislature reauthorizes it. In his State of the State address, Governor Shumlin called for reauthorization. In fact, he called for expansion of the Fund.
That’s a tough sell in the current budget climate. And a letter signed by 50 lawmakers would appear to indicate a high degree of skepticism about the Enterprise Fund, or at the very least, its proper place in the list of priorities.
To me, this is a positive development. The real impact of these grants is unproven. And whether GlobalFoundries truly qualifies for the money is doubtful. After all, the grant supposedly helps an employer make investments that might not otherwise happen — and in this case, GlobalFoundries has already made most of the investments:
The $1 million from the Enterprise Fund will be allocated in two payments of $500,000 as part of GlobalFoundries’ plan to invest $72 million in capital in its plant. In November, the company announced they had completed $55 million of that investment.
Seems like a logical fallacy here. How can the state grant be a crucial factor in a decision that was made two months ago? Especially since most of the money was spent long before the grant was approved. Somebody got a time machine?
The grant, in the words of State Auditor Doug Hoffer, is nothing more than “a thank-you card to GlobalFoundries.”
I had a lengthy conversation with Hoffer on this subject earlier today. I’ll have more on his remarks in an upcoming post.