Is this the most useless policy review ever?

Hey, here’s some good news. One of Vermont’s more problematic job-creation programs is getting a policy review.

Unfortunately, that’s where the good news ends.

The program is the Vermont Employment Growth Initiative, or VEGI for short. It provides incentives to employers who grow jobs in Vermont. The most frequent VEGI beneficiary is Keurig Green Mountain, which has raised eyebrows in some quarters, (“Fascinating,” I have found myself saying with left brow cocked, “but highly illogical.”) That’s because KGM’s rapid growth was fueled, not by the state’s generosity, but by its then patent-protected K-Cup brewing system.

Since its patents expired, it has struggled to maintain market share, bungled two key product rollouts, and — VEGI grants or no VEGI grants — laid off hundreds of Vermonters.

So yeah, I’m all for a review of this program. Unfortunately, this is a fox/henhouse situation. The people doing the review are members of the Vermont Economic Progress Council, the panel that awards the VEGI grants in the first place.

Uh-huh, they’re reviewing their own work.

That ought to go well.

But wait, there’s more!

The foundational premise of VEGI is that the jobs would not exist “but for” the incentive. Sensible; if the jobs would have been created anyway, thanks to what I like to call “capitalism,” then why give public funds away?

The problem is, there is no effort whatsoever to confirm the veracity of a business’s “but for” claim. State Auditor Doug Hoffer has noted that VEGI applications contain insufficient information for a performance audit. And outgoing Commerce Secretary Pat Moulton recently said, live on the radio for all to hear,

… we believe the CEOs, when they sign an application, that the material is true and correct.

In short, VEGI runs on the honor system. The “but for” provision is functionally useless.

And you know the really funny part?

The purely internal “review” won’t even include “but for,” which is the aspect of the program most desperately in need of a good shakeup.

That brilliant omission was the work of the 2016 Legislature, which mandated this little charade. I’m imagining some kind of last-days, closed-doors deal that held harmless the “but for” provision. Either that or the whole review was meant to be a whitewash from the gitgo.

Think I’m being too harsh? Well, let’s turn to VEPC executive director Fred Kenney. He told VTDigger that while VEGI is budgeted at $2 million to $3 million a year, in reality it’s free!.

The program theoretically costs the state nothing, Kenney said.

The money companies receive from VEGI actually comes from new revenue the state realizes from its investment in those same companies, he said.

“That’s the whole point: It’s revenue we never would have seen,” Kenney said.

Bit of circular reasoning there. “But for” may be unmeasurable, but he is dead certain that each VEGI grant creates jobs and state revenue that wouldn’t otherwise exist. Because, “but for,” of course.

Ah, innocence.

My guess: the “policy review” comes up with a few cosmetic changes and otherwise declares the program to be in top-top shape. Good work, boys. Drinks all around.

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2 thoughts on “Is this the most useless policy review ever?

  1. Larry Wilcox

    You can fool some politicians some of the time, but you can fool Vermont politicians all the time. None of them thinks this VEGI funding seems a bit reckless in a time of budget deficits? It’s as bad as throwing money at EB-5 projects with few checks and balances. How does this wasting of money (unchecked no less) not rise to the top of a politician’s “something doesn’t smell right here” pile? Maybe our state motto should change to “Hey Corporation. Want Some Free, No Questions Asked Money? Come To Vermont.”

    I’m Larry and this is my brother Daryl and my other brother Daryl.

    Reply
  2. Cynthia Browning

    It is important that people know that a number of legislators share the concern about the subjective “but for” provision — I myself believe that if either a spending program or a tax provision is not auditable, as Mr. Hoffer has said that the “but for” standard is not, we should be using our scarce resources in other ways that have measurable performance results. As far as I am concerned the evaluation of the VEGI program and many other tax provisions has only just begun.

    Economic development programs should be concentrated on improving conditions for ALL Vermont businesses and workers, not handing out special subsidies to particular relatively large, profitable corporations.

    Rep. Cynthia Browning, Arlington

    Reply

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