By Governor Peter Shumlin
Since its inception in 2007, the Vermont Employment Growth Incentive program (VEGI) has encouraged companies to relocate to or grow in Vermont, translating into well-paying jobs for Vermonters. In the eight years since the program was launched, companies approved for VEGI have created 3,038 new full-time jobs, added $187 million in new payroll, and made $495 million in capital investments in Vermont. All this incremental economic activity has generated almost $30 million in new revenues to the state. In fact, the companies receiving VEGI incentives have exceeded their economic projections by an average of 175 percent and the revenue return is 288 percent higher than projected.
What makes VEGI unique from incentives offered by other states is that it is entirely linked to job creation. VEGI dollars only go to qualified companies if they create a specified number of jobs and increase payroll. The company (be it new to Vermont or an existing one with a new growth opportunity) must prove that this growth would not have occurred without the incentive. If the company does not meet performance and job creation requirements, the incentives are not paid.
The VEGI program has been a success for Vermont and Vermonters, and I am proposing we double down on its job creation potential with several changes that will help create more employment opportunities around the state. The proposals are designed to enhance the program while maintaining the integrity and important controls that earned VEGI a “best-in-the-nation” rating from Good Jobs First, a national policy resource center.
We are proposing to improve VEGI in a few ways.
First, we will make the VEGI program more
accessible to businesses in all parts of the state. At present, the only jobs eligible for the incentive are new hires that meet the VEGI Wage Threshold–160 percent of the Vermont minimum wage. I am proposing we tie the VEGI wage threshold to the state’s Livable Wage, currently $13 an hour. This will make the program more effective in regions of the state where starting wages and the cost of living may be lower than they are in other regions. To further drive economic opportunities in those regions, I am also proposing we remove a cap that limits enhanced VEGI incentives to regions of the state with lower incomes and higher unemployment.
Next, we will enhance the incentive for manufacturers and high-tech employers, the cornerstone of innovation in Vermont. Manufacturers and high-tech employers account for more than 11 percent of our workforce and they provide high-paying jobs with good benefits, all while bringing new revenue to our state. We need to do all we can to encourage these companies to grow right here in the Green Mountain State, and the proposal I have laid out would provide an enhanced incentive to these sectors whose growth is critical to Vermont’s economic future.
Lastly, we will encourage more training for new employees. I am proposing a new program that would encourage VEGI recipients to use some of their incentive to provide training for new employees. This proposal will allow businesses that have been approved for VEGI, and are enrolled with a state-approved training program, to use some of their VEGI incentive early on for training costs. The company still must create the required new jobs and payroll, but instead of receiving the incentive incrementally over five years, the company will receive one payment to help defray the costs of training early on. This gets more new employees trained sooner without any additional cost to the state.
The VEGI program has been a success for Vermont and Vermonters. It’s a program that works but it can work better. If we’re successful in improving the program, it will give a boost to businesses that are creating jobs and economic opportunity in every corner of the state.