The million-dollar greeting card

Okay, here’s my promised post about the Vermont Enterprise Incentive Fund.

It’s garbage. It stinks. It’s an insult to everyone, liberal or conservative, who believes in good government.

It needs to die. Or at the very least, it needs a complete overhaul. Strong words, but I can back ’em up.

The Enterprise Fund, for those just joining us, is a program of state grants for businesses moving to, or making significant investments in, Vermont. It is meant to be used in “unforeseen or extraordinary circumstances.” Those are Governor Peter Shumlin’s own words, quoted from his own press release.

The Fund was most recently deployed last Friday with a $1 million grant to GlobalFoundries, in support of a $72 million investment in its Essex Junction facility. In a number of ways, this grant seems at odds with the Fund’s stated purpose. Let’s start with this: GlobalFoundries announced the investment in October. By November, it had already invested $55 million of the money.

So, absent a time machine, how could an investment made in October be contingent on a state grant approved three months later?

Even if you ignore that anomaly, if the investment is already well underway, how in the world can you classify it as “unforeseen or extraordinary”?

Well, you can’t. In the words of State Auditor Doug Hoffer, this grant was “basically a thank-you note.”

A million-dollar thank-you note. Next time, maybe just go to Capitol Stationers. They have a very nice selection.

I’ve previously covered the skeevy way this grant was greenlighted. The Emergency Board agenda was published on December 29, but it was kept under wraps until Thursday, January 7 at 4:17 pm. Its meeting was at 8:30 the following morning. This prevented anyone besides the administration and GlobalFoundries from having a chance to offer testimony or information. It also minimized media coverage; VTDigger’s Erin Mansfield was the only reporter in attendance.

Before the agenda was made public, 50 lawmakers had signed a letter asking for postponement on any grants; the Emergency Board refused. Why did a grant for investments announced in October need to go through so quickly and with so little public notice? No explanation has been offered. I suspect there is no explanation to be had.

The Enterprise Fund will expire at the end of the year unless the Legislature reauthorizes it. I hope the circumstances of the GlobalFoundries grant will give pause to lawmakers. And I hope that the letter from 50 legislators is a signal that the Legislature might, at the very least, take a long hard look at the Enterprise Fund and give it a proper structure. Because now, it has none.

“The program is very vague,” says Hoffer. “It’s not really a program.”

To understand this, let’s take a trip down Memory Lane to the creation of the Enterprise Fund.

It happened in the spring of 2014, when anxieties over the future of IBM were at a fever pitch. The state Senate had already approved a big economic development bill. On April 14, Gov. Shumlin unveiled the Enterprise Fund proposal. That’s extremely late in the session to be introducing a new idea. But it had broad support, and it was whisked through the House in two weeks’ time. It was then added to the final bill by a House-Senate conference committee.

The whole thing took less than a month from start to finish. Do you know how often an idea becomes a bill and then becomes law that quickly? It may be unprecedented. It’s certainly not the best way to make law.

The terms of the Fund were kept as vague as possible to give the Governor broad discretion — supposedly at crucial moments when time is of the essence. Again, not a factor in the new GlobalFoundries grant.

There are no hard-and-fast rules for the Emergency Board to follow; it is merely asked to “consider” various factors.

For example: “Did the government and the company submit enough information for the State Auditor to do a performance audit?”

Please note: this is not a requirement. “They’re supposed to ‘consider’ whether there’s enough information for the Auditor,” Hoffer told me with audible air-quotes. In this case, the Board approved the grant despite a lack of such information, which leaves Hoffer with his hands tied. “To do an audit, I need sufficient documentation. I don’t have it. It wasn’t presented to me.”

Well, as the Church Lady would say, isn’t that conveeeeenient.

There may or may not have been some backroom dealing, some mutual backscratching in the GlobalFoundries grant. But the very nature of the Enterprise Fund leaves the door wide open for abuse and insider deals. It’s pretty close to a slush fund for the Governor.

And now Shumlin wants not only to reauthorize the Enterprise Fund, he wants to make it permanent and give it dedicated funding. (The first time around, funding was contingent on wringing a surplus out of the state budget. And, what do you know, they did!)

This is a bad idea, a really bad idea. At the very least, the Legislature should impose tougher standards and a thorough, transparent approval process. The Governor has already flouted the intended rationale for a loosely-administered fund: “unforeseen or extraordinary circumstances.” There was nothing unforeseen about the $1 million greeting card delivered to GlobalFoundries. There is obviously nothing to prevent this Governor or a less upright successor from dipping into this Fund whenever he or she wants to.

That’s not good government. The Legislature must reform the Enterprise Fund from top to bottom, or just kill the damn thing.

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9 thoughts on “The million-dollar greeting card

  1. sarrants

    The whole thing stinks. You don’t rush things through like that unless you don’t want inconvenient questions. I’m surprised Tim Ashe didn’t raise any serious opposition. I’ll look real closely at his challenger in the next election. I overheard folks talking about this when I was out at dinner over the weekend. Folks aren’t happy.

    Reply
  2. newzjunqie

    Shame on Shummy! Ever the snakeshifter. Former supporters in his declared party — Dems — of which I was once a strong one will rue the day we ever supported or voted for this snake-in-the-grass. His failure of a legacy will affect VT long after he is gone. Hopefully we will remember if or when Mr. Ethically Challenged-in-chief tries to run for congress what a complete sellout and sham he is. He can never represent us as his own many interests will always be first and foremost.

    No more enterprise fund or payouts to private business. Period. VT politicians and bureaucrats have proven time and time again they cannot be trusted with our money. Period. And, there are low-interest loans available through SBA and such things as “Banks”. My dad was a very successful small business owner and did 90 day notes. But that was back when you had to be creditworthy and ya know, honest. If a business owner does not possess those characteristics they should not be in business or at least not have ass carried and subsidized by those who have no direct benefit.

    Very disappointing that the plant went to a foreign government, was basically a gift iow nothing was paid — they were in fact paid millions to take it which should preclude them from ever recieving another dime. And, first on the agenda: voluntary layoffs, forced if not enough “volunteers”? This benefitted the companys’ profitability. Capital investments also benefit the companys’ profitability, neither benefit VTers.

    Biggest problem I see is giving tacit permission to return to the trough for additional feedings which will then become shakedowns as this was, and has been the Shummy signature and the way he does business. Has never conducted business according to the “Vermont Way” he has crowed about and is not a quintessential Vermonter at all. I suggest he move to Chicago and learn to roll with the big dogs where he will fit right into the gangsta scene and probably teach them some new tricks.

    Yet another chapter in the annals of the antics of our extremely dishonest, untrustworthy & imo worst governor VT has ever known.

    Once again governor good riddance and watch that door.

    Reply
    1. newzjunqie

      Correction: Fuzzy math rides again my baad — that would be Billions with a B, making it even more breathtakingly foolish.

      Reply
  3. Walter Carpenter

    “Very disappointing that the plant went to a foreign government, was basically a gift iow nothing was paid — they were in fact paid millions to take it which should preclude them from ever receiving another dime.”

    I am disgusted by this too and hope it ends. On the other side, and not to justify it, these companies play the states off of one another to see what gifts or tax breaks or loopholes they can wring out of them — gifts and tax breaks which you and I have to make up for. They know that just the rumor that they might relocate to places which give them better “concessions,” sends shivers up and down the spine of that state.

    Reply
  4. chuck gregory

    When the men of the tiny Bronze Age village of Rome found the themselves short of women, they raided the Sabines next door and took theirs. The event was commemorated in “The Rape of the Sabine Women.”

    Springfield was raped by Wall Street, just as Vermont’s treasury is being raped by Global Foundries. Every town in Vermont and the state government needs to develop defenses against this sort of thing. The tools to do so are there; we simply need to pick them up and use them. Unfortunately, if Springfield’s Planning Commission is typical of other towns’, it is going to be very hard to do so.

    Reply
  5. newzjunqie

    @WC I get that. This is why system so effed. If there are no firm agreements and committments, they can return again & again and leave again and again. Find it difficult to believe any state more stupid or clueless than VT bumpkins. Plus VT successes WE VERMONTERS have built by bankrolling, as in GMCR & Burton snowboards, will stay until grass is greener and spigot of funds begin to trickle. But will admit we have a poor business environment.

    We need to stop funding thieves who happen to own businesses with clear rules. We now have nothing to show for our largesse, and will have more businesses rolling VT again and again, draining economy, along with young ppl leaving and primarily service jobs available despite Shummys’ lies to the contrary. Tax-free incentives in NY not necessarily prime midtown, but of scale where NY has decided it wishes to develop, nobody rolls NY.

    When Shummy first devised foolhardy plot to hand Crown Prince $2.5 Million–the entire farm of the business development fund no less–to the din of horrified gasps, had a funny feeling when he made no comment, he would return using trademark underhanded snakeshifting methodology, to get what he wants–only thing he cares about. Crown Prince and all others who witnessed heist now know Shummy to be a mere chump, opportunist, or both.

    Well he did-surprise!. Like an oppositionally-defiant child, can’t follow rules, never let anyone tell him what he’s gonna do, horses-ass stubborn, though not getting all of what he wanted as a show-off to one of the worlds’ wealthiest, at least secretly ushering him to his own private slot machine in his casino, the state of VT, courtesy of the peasants with a mere $1 million the best he could do. Saving face in the eyes of himself and his suitor(s) by settling each score with the stealth of a cat burgler and brazen steeliness of a riverboat gambler has been caught time and again gambling away every dime lawmakers let him have, now a bonfire in the many millions to show for it all.

    Newest conquest, who or whatever it may be, is like heroin to Shummy, and like a petty-crim addict, next fix means more than hopes, dreams & wellbeing of family, in this case fellow Vermonters. Curious choice for state-of-state to choose herion addiction, making US headlines, fooling all who do not know him the way VTers do, smokescreen to hide lack of single-payer funding avoiding questions by changing subject. Didn’t to do homework & pulled more bs out of sleeve fooling everyone. And then kicking state workers to the curb by villainizing them to pay for his addiction. I do not agree with the inference re the death of state worker, but author of this op-ed articulates & nails Shummys’ modus operandi like no other, shame it was overshadowed by other comments.
    http://vtdigger.org/category/commentary/page/2/

    And like the serial philanderer he has been with VT & our revenue, he will never change.

    Reply
  6. Cynthia Browning

    Just saying: most of the arguments against the enterprise fund, including characterization of it as an unaccountable slush fund, were made during passage of the bill, to no avail. The fear of losing the IBM plant overwhelmed any kind of good government considerations. Let us hope that we can think better of this approach now.

    Think of what $1 million could have done for weatherization, for affordable housing, or for the Vermont Veterans home. Or just to help with Medicaid.

    Any corporation that requires handouts and tax credits in order to stay or to come or to create jobs will leave as soon as some other area offers a bigger ‘bribe’. Instead we should be undertaking policies that benefit all Vermont businesses, like comprehensive tax reform so that tax rates are low and stable, extensions of telecommunications infrastructure, and reducing policy uncertainty surrounding health care and insurance.

    Thanks for the Church Lady reference.

    Rep. Cynthia Browning, Arlington

    Reply
  7. Walter Carpenter

    “like comprehensive tax reform so that tax rates are low and stable, ”

    Or work to close those loopholes and such which give special advantages of those with more, like globalfoundaries, over those with less.

    Reply

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