State Auditor Doug Hoffer, whose work is more honored in the breach than in the observance, has released a report that’s critical of the Vermont Economic Growth Initiative.
(Before he sends me a correction, please note that this report is not a formal “audit,” my whimsical headline notwithstanding.)
The report came out one week ago today. You might well have missed it, because it was pretty much ignored by the Vermont media. As far as I can tell, it wasn’t covered by Seven Days or VTDigger or any of our sadly diminished dailies. (The Vermont Business Journal did post Hoffer’s press release on its website without any actual reportage, but that’s about it.)
Which is kind of sad. Hoffer is the chief watchdog of state government, after all. His reports ought to be newsworthy. But the media ecosystem is so diminished that a lot of stuff falls through the cracks.
I also suspect that Hoffer has gotten a reputation as The Auditor Who Cries Wolf, especially when it comes to economic incentive programs. His skepticism runs counter to the conventional wisdom, which is that these incentives are a valuable tool in the box. And that if the state doesn’t offer incentives, it might lose out to all the other jurisdictions that offer incentives.
That conventional wisdom is treated as gospel by the executive branch and the Legislature. Hoffer always gets a polite hearing before the appropriate House and Senate committees, who then proceed to ignore whatever he has to say. And that’s a shame, because Hoffer is a smart fellow with a real dedication to making government run as efficiently as possible. His work should be taken seriously.
Scott Milne tried to make up for his two previous statewide campaigns, which were remarkably issue-free, by releasing a lavishly illustrated and ridiculously detailed60-point policy agenda this week.
His Tuesday announcement got lost in what turned out to be a very big news day, including Dr. Anthony Fauci’s guest appearance at Gov. Phil Scott’s Covid-19 briefing and Scott’s veto of the Global Warming Solutions Act.
I felt a little sorry for Milne at the time. But having taken a dip in his mile-wide-but-inch-deep policy pool, I decided it’s probably better for him that this stale batch of recycled ideas didn’t attract much notice. The package is dominated by conventional Republican tropes, failed Scott administration proposals, and plenty of filler to make the agenda seem more impressive than it is. You’d think a guy who’s reinvented himself as an edgy cryptocurrency investor would have some fresh ideas to contribute.
What’s even worse is that Milne completely fails to address some of our most critical challenges. There’s nothing about our raging opioid crisis, not a mention of racism, justice, policing or corrections, and barely a nod to climate change.
Since Milne’s document is searchable, we can quantify that. “Opiates” and “racism” are nowhere to be found. The word “climate” occurs precisely once in the 33-page document. And that’s a reference to Vermont’s economic climate.
After the jump: YOU get a tax incentive! And YOU get a tax incentive! EVERYBODY gets a tax incentive!!!
Commerce Secretary Patricia Moulton was far too busy to comment on the sudden, unexplained departure of Gene Fullam as head of Vermont’s EB-5 office, but she did manage to make time for a live interview on Thursday’s “Vermont Edition.” Subject: EB-5.
Inexplicably, host Jane Lindholm didn’t ask about Fullam’s departure. A deal, perhaps?
Immediately preceding Moulton was State Auditor Doug Hoffer, who’s been critical of the grant programs administered by her agency. Among other things, he pointed out that it’s impossible to prove whether the state grants actually create economic activity that wouldn’t exist in their absence.
And then Moulton came on and admitted that those programs operate on the honor system. Regarding the Vermont Economic Growth Initiative, she said:
… we believe the CEOs, when they sign an application, that the material is true and correct.
Hey, remember in January, when the state Emergency Board approved two grants from the Vermont Enterprise Fund? GlobalFoundries was given $1 million, and $200,000 went to BHS Composites. Well, turns out those will be the last VEF grants ever awarded. During its recently concluded session, the Legislature rejected Governor Shumlin’s bid to add new money to the Fund — and decided not to extend the program.
The Fund is empty, and in the absence of legislative action, the program will sunset at the end of the fiscal year.
“It’s disappointing,” says Shumlin spox Scott Coriell*. “The Enterprise Fund has been a useful tool, but we do have other tools at our disposal.”
*Say that five times fast.
There was some funny business around those January grants that may have sealed the fate of the two-year-old program.
Last week, Keurig Green Mountain announced 330 layoffs, including 200 in Vermont. The move came after sales and profit shortfalls hammered the company’s stock price. (Last November, KGM traded at more than $150/share. Now it’s barely over $50.) One analyst told MarketWatch.com that KGM shows “‘telling’ signs of a company struggling to turn around its business.”
The layoffs were widely reported in the Vermont media. What wasn’t mentioned is that since 2007, KGM has received approval for a whopping $7 million in job creation tax incentives through the state’s Vermont Economic Growth Initiative (VEGI). What does KGM’s contraction (and uncertain prospects) mean for its generous tax incentives?
I sought answers from Fred Kenney, Executive Director of the Vermont Economic Progress Council and head honcho of VEGI. He offered a fair bit of reassurance on the VEGI mechanism and state oversight of KGM grants, but I remain dubious on the fundamental concept of tax incentives as a means to economic growth.
In short, while VEGI is a well-designed program of its kind, the KGM experience rings some very real alarm bells about it.