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Douglas: Good for Business

01/09/12 7:55AM By Jim Douglas
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(Host) We hear a lot about where Vermont's economy stands in various national rankings. Former Vermont governor and commentator JIm Douglas puts a few of them in perspective.

(Douglas) Vermont has weathered the recent economic storm (not to mention the literal one) better than most states. We can speculate as to why: the diversity of our economy, ingenuity and hard work of our residents, strong bond ratings, perhaps other factors. Two recent national rankings shed some light on the creative use of state and Federal programs that have contributed to our success.

A Washington-based research organization called Good Jobs First rated Vermont third best in the nation for using state subsidies to create jobs. The report cited our grants for training from the Departments of Labor and Economic Development and low-cost financing thru the Vermont Economic Development Authority. But the highest scores were earned by a program scorned by many lawmakers. In 2004 I proposed reforming the Economic Advancement Tax Incentives, a successful but overly complex array of stimuli, by creating a single refundable credit to reward an employer for achieving job creation targets. It took the legislature three years to approve it, but the new program, the Vermont Employment Growth Incentive (or VEGI), was responsible for creating nearly seven thousand jobs by the end of 2010.

For the second year in a row, Vermont's EB-5 Regional Center was named the best in the country by the Artisan Business Group. EB-5 is a Federal program that offers immigration priority to foreigners who invest in companies that create a minimum number of jobs. Ours is the only state-run center (thru the Agency of Commerce) and continues to demonstrate success in attracting investors from around the world, especially Asia. I led several missions there in recent years to encourage support, despite their characterization by a prominent legislator as ‘junkets.' The Jay Peak Resort in northern VT is arguably the most successful EB-5 project in the nation.

There are other rankings, though, that are quite troubling. Forbes rates Vermont 45th ‘Best for Business and Careers,' assessing each state's costs of doing business, labor supply & regulatory climate, among other factors. The Small Business and Entrepreneurship Council lists VT as 48th for small business survival. The study cites high taxes and other costs of doing business, along with excessive government spending at the state and local levels.

Whenever these rankings are announced there are always those who reject the methodology and insist that everything here is really more favorable. The problem is that businesses making decisions on where to locate or expand give them at least some credence. I recall vividly that, when I signed the bill creating low-profit limited liability companies in 2008, a Washington attorney attending the ceremony thanked me and then expressed surprise that VT would take such a step. "You know," she said, "you don't have a very good reputation as a place to do business."

Despite our tremendous advantages as a place to live and work, and the creative incentive programs that have been recognized nationally, we must still acknowledge the need to lower the costs of doing business so we can improve in national business rankings.
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