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Vermont Auditor Questions Legality Of State Incentive Award

State Auditor Doug Hoffer, seen here in his Montpelier office seated at a desk.
Henry Epp
/
VPR File
State Auditor Doug Hoffer is questioning whether state officials went beyond their authority last year when they approved a job growth incentive to a California-based semiconductor company.

In a report released Monday, Vermont Auditor Doug Hoffer questioned whether a state economic development board went beyond its statutory authority last year when it awarded a California-based semiconductor company up to $5.3 million in incentive payments.

Hoffer said state economic development officials began working to offer incentives to the company Marvell when they learned it intended to buy Avera Semiconductor, a subsidiary of GlobalFoundries, which employed about 300 people in Vermont at the time. Hoffer said officials made the deal in an attempt to keep Marvell from moving its operations out-of-state, without evidence that the company had plans to do so.

"This program is about growth, not job retention. That's the problem," Hoffer said in an interview.

On October 31, the Vermont Economic Progress Council (VEPC) approved Marvell to receive up to $5.3 million through the Vermont Employment Growth Incentive (VEGI) program, with an expected final award of about $4.5 million. Just days later, Marvell laid off 78 employees in Essex Junction.

More from VPR: Days Before Announcing Essex Junction Layoffs, Company Secured $5.3 Million State Incentive

At the time of the award, Economic Development Commissioner Joan Goldstein said the intention was to keep some of Marvell’s jobs in Vermont, and that the state had limited options to entice the company to stay here.

"To base a $4.5 million decision on conjecture is a questionable use of public dollars." - Doug Hoffer, state auditor

"The prospect of all of that talent and human capital leaving the state is really, really tough for us to take," Goldstein said in November 2019. "If we did not do VEGI, I'm not sure what else would convince them to keep those jobs here."

In his report, Hoffer, who's long criticized the VEGI program, said Marvell did not show any intentions of uprooting its new employees from the state, and admonished state officials for not questioning their assumption that the company may move elsewhere.

More from VPR: Can You Prove That Vermont's Main Business Incentive Creates Jobs? It's Debatable

"To base a $4.5 million decision on conjecture is a questionable use of public dollars," Hoffer said.

In a response attached to Hoffer’s report, VEPC Executive Director Megan Sullivan said Hoffer raised "serious allegations" without "clear evidence." Sullivan called into question Hoffer’s accuracy, but did not offer specific rebuttals to his claims, saying she was not able to comment "as we are in the midst of responding to the overwhelming impacts of the current global pandemic." Sullivan added that the goal of the report was unclear, given that the state economy is experiencing intense stress from the pandemic.

"It’s disingenuous to say 'there’s something wrong in your report,' without saying what it is and why, and what evidence you have to counter what I’ve presented," Hoffer said when asked about Sullivan’s response.

Hoffer concluded his report by noting that VEPC decisions "are not subject to administrative or judicial review" under state statute. He suggests the Legislature consider changing that measure.

As for the timing of the report, "we’re releasing it now because it’s done," Hoffer said.

More from VPR: State Board Responds To Media Attention Toward Business Incentive Program

Have questions, comments or tips? Send us a message or get in touch with reporter Henry Epp @TheHenryEpp.

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