Are there flaws in VEGI (Vermont Employment Growth Incentive)? In a letter to the editor in the June 13 Independent, one person expressed this opinion. The facts suggest that he is wrong.
VEGI is a unique economic development strategy; there is none like it in the nation. It is a program that offers incentives to businesses that grow employment and do it because of the program specifics. The “biggest problem,” with VEGI, according to the critic, is that “large incentives are given to large companies.” Keurig’s participation and subsequent layoffs was cited as an example. Since 2007, 62 percent of VEGI incentives have been authorized for companies with less than 100 employees and 38 percent had less than 20 employees. When Keurig, formerly Green Mountain Coffee Roasters, first applied in 2007 they were a small Vermont company. The incentives Keurig received under VEGI have assisted in ensuring the company’s growth and success, plus, and this is the point, Vermont has shared in this success. Further it is important to note VEGI awards participants well after their applications are approved. Proof that the job creation occurred and has been sustained is part of the program. Keurig and any other VEGI participant that fails to maintain the job growth promised in the VEGI program, either does not receive the incentive or the benefit is discontinued.
What about the rate of return in VEGI? This was cited as another problem. Since 2007 the ROI, rate of return, is about three to one, meaning the state is getting three dollars of financial benefits for every dollar spent. This does not include the 3900 well-paying jobs (job creation has minimum pay standards), the $242 million in new payroll, and the $623 million in new capital investment.
The author of the anti VEGI piece suggests we could do more for “small” businesses. While there is always room for improvement, the state does offer many programs to provide capital, job training and other business support for “small” business. Some of these programs include Small Business Development Center (SBDC) counseling, Vermont Training Program, Vermont Economic Development Authority (VEDA), VSJF (Vermont Sustainable Jobs Fund, Working Lands, the R&D Tax Credit program, Small Business Administration (SBA) loans, Vermont Procurement Technical Assistance Center (PTAC) and more. We understand the importance of assisting small businesses. Actually Vermont small businesses are one of the state’s bright economic areas. Vermont’s national rankings in several key areas of small business development are quite high. We are 18th in the nation in R&D intensity, seventhin the nation in the number of companies with zero to nine employees, and sixth in the nation in the new firm survival rate. These statistics come from the Vermont Futures website. Here are two testimonials citing Vermont’s economic development efforts taken from articles in the May issue of Vermont Business Magazine. The first credits VEGI with helping Vermont retain Vermed Inc., a Connecticut River valley company, after the company was sold to an out of state firm. Then there is the example of the new business established in Waterbury after Hurricane Irene. Store owner Caleb Magoon said “a lot of credit needs to be given to the state of Vermont for providing amazing business resources to business owners.” Caleb singled out the Vermont Small Business Development Center.
We need to continue growing our efforts in economic development and take action on improvements like, infrastructure upgrades, more workforce housing, financing, better education coordination, a funded economic development marketing strategy, etc. A strategy that requires no funding is attitude. I am especially concerned about some people’s attitude toward business. The author of the VEGI critique suggests he has a bias against “large” business, or at least assisting large business. His feeling was the money can be better spent elsewhere. We need to be courting and nurturing businesses of every size. All businesses located in Vermont, small and large, make multiple contributions to the state. All should be made welcome. Our programs, including VEGI, make an effort to reach out to all. So should our citizens, especially people concerned about the Vermont economy.
Fred Baser, Bristol