(Host) A final report by the state auditor has strong criticism for a state program that gives tax credits to businesses that create jobs. The investigation by outgoing Auditor Elizabeth Ready says credits have gone to some companies that have laid off workers. Ready wants the Legislature to place a moratorium on the tax credits until the program is reformed.
VPR’s John Dillon has more.
(Dillon) Ready’s office looked at 21 businesses that were allowed almost $21 million in tax credits over the last few years. She says the companies promised to create more than 3,000 jobs, but instead came through with just a couple hundred.
According to Ready, the jobs that were created cost the state more than $92,000 each.
(Ready) “Most egregious of all is that eight of these 21 companies actually reduced jobs over the period and yet were allowed $8.1 million in tax credits, $4.6 [million] of which have already been applied to reduce their tax liability. So that’s money out the door.”
(Dillon) State law keeps secret the names of the companies that got the credits. Ready says the Legislature should change the law to require disclosure when companies take large state subsidies. She also says lawmakers should look at the broader question of how to promote economic development.
(Ready) “First of all, we think this program is broken. We do recommend that the General Assembly should back way from the notion of tax credits and look at a unified development budget.”
(Dillon) The credits are authorized by the state Economic Progress Council. Council Executive Director Fred Kenney says Ready has twisted the data to paint the program in a bad light.
First of all, he says that the companies that got credits have generated about a half billion dollars in new economic activity. Second, he says the state also got new tax revenues from those companies.
(Kenney) “So you take all the new revenues that are generated by the new economic activity, subtract out the credits that were actually utilized and you get a net revenue benefit of $10 million to the state. So you get jobs, you get investment and net revenues. I think that’s a program that works.”
(Dillon) Ready strongly disagrees. She says if anything, her report was generous in calculating the number of jobs created by the program.
(Ready) “At its basic level, it’s just not working. And don’t forget these are the companies that took credits. These are the ones that you would expect to be the cream of the crop.”
(Dillon) The Legislature has already scheduled hearings into the tax credits for mid-January.
For Vermont Public Radio, I’m John Dillon.