Gov. Peter Shumlin and Fred Kenney, executive director of the Vermont Economic Progress Council, today released the Vermont Employment Growth Incentive's annual report showing that the tax incentive program is working better than projected. In each year since its inception, actual activity has exceeded projections -- meaning more new employees, more payroll, more capital investments, and more net revenue to the state than originally anticipated.
"The report shows that not only is the VEGI program helping to create jobs, but the kinds of higher paying jobs we want for Vermont," the Governor said.
"The Council is pleased that the work we are doing to support business growth in Vermont is having a positive impact around the state," said Stephan Morse, Chairman of the Vermont Economic Progress Council. "New, well-paying jobs for Vermonters and net tax revenue generation - a double positive for everyone."
According to the report:
ACTUAL ECONOMIC IMPACT
(January 1, 2007 - December 31, 2010)
New Qualifying Jobs 898 1,328
New Qualifying Payroll $40,889,799 $65,448,278
New Qualifying Capital Investments $87,673,575 $109,624,763
Incentives Paid $2,108,230 $1,945,562
Estimated Net Revenue Benefit (to the State) $3,299,316 $5,259,300
"We are happy to report the VEGI program is excelling at doing exactly what it was created to do," said Lawrence Miller, Vermont's Secretary of Commerce and Community Development. "There are new jobs with higher wages for Vermonters; there is investment in new facilities, machinery and equipment to keep Vermonters competitive; and there are new tax revenues to support other state programs."
The average wages for the new jobs created by VEGI program companies are significantly higher than the Vermont average and, in keeping with the rest of the numbers, are higher than originally projected by the companies receiving incentives. For 2007-2010, the average annual Vermont wage was $37,619, and while the average annual wage for new qualifying jobs created under the VEGI program was originally projected to be $46,407, the actual average is $51,371.
In early 2012, Good Jobs First (www.goodjobsfirst.org), a national policy resource center for grass-roots groups and public officials that promotes corporate and government accountability in economic development, rated Vermont's VEGI program as the best in the United States for enforcement, safeguarding the taxpayer, and ensuring good job creation.
How the VEGI Program Works
In January 2007, the VEGI program began offering new incentives for business recruitment, growth and expansion in Vermont. The VEGI program provides a cash incentive that is paid from the incremental tax revenues generated by the new jobs created and investments made by an authorized business, only after the incremental jobs are created and investments are made. To be authorized, a company must apply to the Vermont Economic Progress Council (VEPC), a citizen board that determines:
- Whether the economic activity would not occur or would occur in a significantly different and/or less desirable manner without the incentive (But For);
- Whether the economic activity will generate more incremental tax revenue for the state than is foregone through the incentive (cost-benefit modeling); and
- Whether the company and economic activity are consistent with a set of nine program guidelines.
VEGI incentives are earned over a period of up to five years and paid out over a period of up to nine years. The incentives are earned only if base employment is maintained and payroll, employment, and capital investment performance requirements are met by the company each year. If the company earns the incentive by meeting performance requirements in a particular year, the incentive is then paid out in five annual installments, if the new jobs and payroll are maintained. Once authorized by VEPC, claims for VEGI incentive installments are examined annually by the Vermont Department of Taxes.
The Vermont Economic Progress Council is an independent board consisting of nine Vermont citizens appointed by the Governor and two members appointed by the General Assembly that considers applications to the state's economic incentive programs.
VEPC is attached to the Vermont Agency of Commerce and Community Development, whose mission is to help Vermonters improve their quality of life and build strong communities.
For more information, visit: http://accd.vermont.gov/business/start/vegi/.