VEPC responds to auditor's VEGI report

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VEPC responds to auditor's VEGI report

Thu, 06/12/2008 - 8:00pm -- tim

June 12, 2008
Contacts:             Karen Marshall, VEPC Chair (802) 343-3740
     Fred Kenney (802) 828-5256
Official Statement of VEPC Board Chairwoman Karen Marshall on Auditors VEGI Report

The Auditors report is largely favorable and the Vermont Economic Progress Council generally agrees with its facts; however we would take issue with many of the conclusions reached.

Basing background growth on company specific data instead of industry average data and updating model data as it changes throughout the year, as suggested by the Auditor,  are contrary to statute, unsound economic modeling, and would make the program more costly and complex to administer. Further, if implemented these recommendations would not treat each application with consistent standards of evaluation.

More importantly, the methodologies suggested by the Auditor would not save the State millions as he is suggesting. Even using the current methodology, which was approved by the Legislature, the VEGI program is an investment that generates new revenues for the state.  "Saving" our way out of new job creation is not a proactive strategy to support economic well being for Vermonters. 

For the companies that were approved in 2007, the State of Vermont will realize over $8 million in net new revenues even after paying the incentives, and we also get about 1,000 new, well-paying jobs, $37 million in new payroll and capital investments totaling over $68 million.

The assertion that an outdated industry classification code was used to calculate an authorization is incorrect.  The correct code, as published and approved by the legislature, was used.  The Council disagrees that data changes should be made mid-year. The Council adheres to the legislated mandate that data updates and changes to the cost benefit model should occur annually. 

In addition the Council believes that the suggestion that an independent source be assigned to participate in the review process is redundant.

The Vermont Economic Progress Council is comprised of members of the public. We take our responsibilities to Vermont and its taxpayers very seriously.

This suggestion by the Auditor that somehow the public interest is not being represented and protected is simply unfounded and impugns the integrity of not only current but past Council members.

The point of the new streamlined incentive program was to reduce the complexity and inefficiency of the prior tax credit program and increase transparency and fairness.

Three of the Auditors recommendations are well-founded and meet these tests. Two of them improving the consistency of the cost-benefit model and updating the regional unemployment differential have already been implemented and a third, redoubling efforts to assure that appropriate company officers sign the applications, will be.

We will examine ways to improve the But For test, and intend to seek changes to the law to resolve questions regarding preliminary approvals and when applicants can start earning incentives.

We respect the Auditors positions and appreciate the diligence shown in this matter.