(Host) Commentator Timothy McQuiston reflects on the Vermont economy and new plans to give it a boost.
(McQuiston) In June, Governor Douglas signed into law a $105 million economic stimulus package that contains financial incentives, tax credits, work force development funds and low interest loans. All of this is intended to help grow Vermont businesses, lure new businesses into the state and, like it or not, to keep some businesses from leaving the state. It also includes a raise in the minimum wage of 75 cents, and a so-called “angel investor” incentive provision to make capital investment in Vermont more attractive to those
people who, well, have money.
But business is business, and Vermont is still competing against other states that remain more lucrative places to do business. Some states are simply cheaper places to do business, like in the South and out West, where not only are labor and energy cheaper, but the regulatory atmosphere tends to be more business friendly. Think Texas and Florida. Compared to Vermont, even expensive, highly regulated states like New York and California are more attractive to business and investors because their greater wealth offers a greater opportunity to make a ton of money.
So state officials over the years have created a patchwork of services to assist business, and therefore help retain and expand employment. The Vermont Economic Progress Council and the Vermont Economic Development Authority target larger businesses for taxation, employment and investment incentives. The Vermont Manufacturing Extension Center and Small Business Development Center are very low-cost assisting organizations. In the governor’s new plan there is also something called the Vermont Opportunity Fund, a $25 million boost for small and startup businesses. A separate, $30 million loan and loan guarantee plan was announced earlier in the year to help farmers.
We’ve lost thousands of jobs in the last two years, from IBM to Stanley Tools and many more, mostly, but not exclusively, in manufacturing. Although some of those jobs have been made up in the tourism industry and the high-end non-profits, like colleges and hospitals, Vermont state government is all but throwing the kitchen sink into economic development.
Vermont isn’t anti-business. That’s a silly, hold-over catch phrase from the early 1990s. But even with all this economic stimulus, Vermont will still be an expensive and, to put it mildly, complicated place to do business. And the new plan will both create new layers of complexity in the process of starting or running a business, and put more of a burden on taxpayers. Maybe $105 million will help maintain our fairly high standard of living but it won’t be the ultimate solution.
The solution is to make the permit process more predictable and straightforward, not “softer.” The tax structure should be spread out, instead of heaped on top of certain types of consumers. And we’ve got to figure out what businesses do well here and play to our strengths.
This is Timothy McQuiston.