Rumors continue to circulate that IBM will sell its plant in Essex Junction.
If it does, there’s a reasonable chance that millions of dollars in state funds will be offered to the buyer to keep the operation in Vermont.
The new $4.5 million Vermont Enterprise Incentive Fund could be used to attract any high tech jobs to Vermont. But the Shumlin Administration, which came up with the idea, and the Legislature, which created the fund, have the IBM plant in Essex Junction in mind.
A Wall Street Journal article last month stoked rumors that IBM’s chip making business, including the Vermont plant, could be sold.
If it is purchased there’s concern the new owner would move the operation elsewhere.
Administration Secretary Jeb Spaulding says the incentive fund gives Vermont a tool other states use to compete for jobs.
"We certainly can compete. We can't match the dollar amounts that a state the size of New York can offer. But in conjunction with the quality of our workforce, the quality of life and the other economic incentives that we can put forth, we can make a good case." - Administration Secretary Jeb Spaulding
The fund is small compared to the cash and incentives a state like New York has to offer businesses, but Spaulding says it's part of a larger package.
“We certainly can compete. We can’t match the dollar amounts that a state the size of New York can offer,” says Spaulding. “But in conjunction with the quality of our workforce, the quality of life and the other economic incentives that we can put forth, we can make a good case.”
Spaulding says Gov. Shumlin is in touch with IBM officials, but the company has offered no information on its intentions for the Essex plant.
The effectiveness of state cash and tax breaks for businesses has long been debated.
Democratic Senator Peter Galbraith of Windham County calls the incentives a "sucker’s game.”
Galbraith argued against the incentive fund and offered several amendments in the Senate. One would have used the money for weatherization efforts.
“The second,” Galbraith says, “said that it shouldn’t go to a company that had 100,000 percent more cash on hand than the value of the incentive. That’s because IBM has $11 billion in cash.”
The other “would have required any recipient to treat the taxpayer investment as an investment and to share any upside with the state,” he says. Galbraith's amendments failed.
Galbraith says Vermont’s strongest selling point is quality of life. He says the state can be a more effective partner for businesses if it helps with the logistics and permits necessary to set up shop.
“I don’t think taxpayers should be in the business of subsidizing private companies,” he says.
Rutland County Republican Senator Kevin Mullin supports the incentive fund.
“I don’t buy into this whole argument that was thrown out on the Senate floor that this is basically just corporate welfare,” says Mullin.
Mullin says the incentive fund provides Vermont with one more way to make the case for a business to locate here, just as other companies do, despite some disadvantages.
“Vermont is not a cheap place to either live or do business, yet despite that Vermont continues to rank high in terms of productivity and entrepreneurship,” says Mullin.
Mullin chairs the Senate Committee on Economic Development, Housing and General Affairs.
IBM employees approximately 4,000 people in Vermont.
"The mere thought of Vermont's largest employer leaving the state certainly played a major role in establishing the fund," says Mullin.
The Vermont Emergency Board, made up of legislators and representatives of the administration, will determine how the Enterprise Incentive Fund will be used.
