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.