The Vermont Statutes Online

Title 32: Taxation and Finance

Chapter 105: Vermont Employment Growth Incentive Program

• Subchapter 001: VERMONT ECONOMIC PROGRESS COUNCIL

• § 3325. Vermont Economic Progress Council

  (a) Creation. The Vermont Economic Progress Council is created to exercise the authority and perform the duties assigned to it, including its authority and duties relating to:

  (1) the Vermont Employment Growth Incentive Program pursuant to subchapter 2 of this chapter; and

  (2) tax increment financing districts pursuant to 24 V.S.A. chapter 53, subchapter 5 and section 5404a of this title.

  (b) Membership.

  (1) The Council shall have 11 voting members:

  (A) nine residents of the State appointed by the Governor with the advice and consent of the Senate who are knowledgeable and experienced in the subjects of community development and planning, education funding requirements, economic development, State fiscal affairs, property taxation, or entrepreneurial ventures and represent diverse geographical areas of the State and municipalities of various sizes;

  (B) one member of the Vermont House of Representatives appointed by the Speaker of the House; and

  (C) one member of the Vermont Senate appointed by the Senate Committee on Committees.

  (2)(A) The Council shall have two regional members from each region of the State, one appointed by the regional development corporation of the region and one appointed by the regional planning commission of the region.

  (B) A regional member shall be a nonvoting member and shall serve during consideration by the Council of an application from his or her region.

  (c) Terms.

  (1) Members of the Council appointed by the Governor shall serve initial staggered terms with five members serving four-year terms, and four members serving two-year terms.

  (2) After the initial term expires, a member’s term is four years and a member may be reappointed.

  (3) A term commences on April 1 of each odd-numbered year.

  (d) Compensation.

  (1) For attendance at a meeting and for other official duties, a member appointed by the Governor shall be entitled to compensation for services and reimbursement of expenses as provided in section 1010 of this title, except that a member who is a member of the General Assembly shall be entitled to compensation for services and reimbursement of expenses as provided in 2 V.S.A. § 23.

  (2) A regional member who does not otherwise receive compensation and reimbursement of expenses from his or her regional development or planning organization shall be entitled to compensation and reimbursement of expenses for attendance at meetings and for other official duties as provided in section 1010 of this title.

  (e) Operation.

  (1) The Governor shall appoint a chair from the Council’s members.

  (2) The Council shall receive administrative support from the Agency of Commerce and Community Development and the Department of Taxes.

  (3) The Council shall have:

  (A) an executive director appointed by the Governor with the advice and consent of the Senate who is knowledgeable in subject areas of the Council’s jurisdiction and who is an exempt State employee; and

  (B) administrative staff.

  (f) Rulemaking authority. The Council shall have the authority to adopt policies and procedures as necessary, and to adopt rules under 3 V.S.A. chapter 25, to implement the provisions of this chapter.

  (g) Decisions not subject to review. A decision of the Council to approve or deny an application under subchapter 2 of this chapter, or to approve or deny a tax increment financing district pursuant to 24 V.S.A. chapter 53, subchapter 5 and section 5404a of this title, is an administrative decision that is not subject to the contested case hearing requirements under 3 V.S.A. chapter 25 and is not subject to judicial review. (Added 2015, No. 157 (Adj. Sess.), § H.1, eff. Jan. 1, 2017.)

• § 3326. Cost-benefit model

  (a) The Council shall adopt and maintain a cost-benefit model for assessing and measuring the projected net fiscal cost and benefit to the State of proposed economic development activities.

  (b) The Council shall not modify the cost-benefit model without the prior approval of the Joint Fiscal Committee. (Added 2015, No. 157 (Adj. Sess.), § H.1, eff. Jan. 1, 2017.)

• Subchapter 002: VERMONT EMPLOYMENT GROWTH INCENTIVE PROGRAM

• § 3330. Purpose; form of incentives; enhanced incentives; eligible applicant

  (a) Purpose. The purpose of the Vermont Employment Growth Incentive Program is to generate net new revenue to the State by encouraging a business to add new payroll, create new jobs, and make new capital investments and sharing a portion of the revenue with the business.

  (b) Form of incentives; enhanced incentives.

  (1) The Vermont Economic Progress Council may approve an incentive under this subchapter in the form of a direct cash payment in annual installments.

  (2) The Council may approve the following enhanced incentives:

  (A) an enhanced incentive for a business in a labor market area with higher than average unemployment or lower than average wages pursuant to section 3334 of this title; and

  (B) an enhanced incentive for an environmental technology business pursuant to section 3335 of this title.

  (C) [Repealed.]

  (c) Eligible applicant. Only a business may apply for an incentive pursuant to this subchapter. (Added 2015, No. 157 (Adj. Sess.), § H.1, eff. Jan. 1, 2017; amended 2021, No. 105 (Adj. Sess.), § 504, eff. July 1, 2022.)

• § 3331. Definitions

  As used in this subchapter:

  (1) “Award period” means the consecutive five years during which a business may apply for an incentive under this subchapter.

  (2) “Base employment” means the number of full-time Vermont jobs held by non-owner employees as of the date a business with an approved application commences its proposed economic activity.

  (3) “Base payroll” means the Vermont gross salaries and wages paid as compensation to full-time Vermont jobs held by non-owner employees as of the date a business with an approved application commences its proposed economic activity.

  (4) “Capital investment performance requirement” means the minimum value of additional investment in one or more capital improvements.

  (5) “Jobs performance requirement” means the minimum number of qualifying jobs a business must add.

  (6) “Labor market area” means a labor market area as designated by the Vermont Department of Labor.

  (7) “Non-owner” means a person with no more than 10 percent ownership interest, including attribution of ownership interests of the person’s spouse, parents, spouse’s parents, siblings, and children.

  (8) “Payroll performance requirement” means the minimum value of Vermont gross salaries and wages a business must pay as compensation for one or more qualifying jobs.

  (9) “Qualifying job” means a new, permanent position in Vermont that meets each of the following criteria:

  (A) The position is filled by a non-owner employee who regularly works at least 35 hours each week.

  (B) The business provides compensation for the position that equals or exceeds the wage threshold.

  (C) The business provides for the position at least three of the following:

  (i) health care benefits with 50 percent or more of the premium paid by the business;

  (ii) dental assistance;

  (iii) paid vacation;

  (iv) paid holidays;

  (v) child care;

  (vi) other extraordinary employee benefits;

  (vii) retirement benefits; and

  (viii) other paid time off, excluding paid sick days.

  (D) The position is not an existing position that the business transfers from another facility within the State.

  (E) When the position is added to base employment, the business’s total employment exceeds its average annual employment during the two preceding years, unless the Council determines that the business is establishing a significantly different, new line of business and creating new jobs in the new line of business that were not part of the business prior to filing its application.

  (10) “Utilization period” means each year of the award period and the four years immediately following each year of the award period.

  (11) “Vermont gross wages and salaries” means Medicare wages as reported on Federal Tax Form W-2 to the extent those wages are Vermont wages, excluding income from nonstatutory stock options.

  (12) “Wage threshold” means the minimum amount of annualized Vermont gross wages and salaries a business must pay for a qualifying job, as required by the Council in its discretion, but not less than:

  (A) 60 percent above the State minimum wage at the time of application; or

  (B) for a business located in a labor market area in which the average annual unemployment rate is higher than the average annual unemployment rate for the State, 40 percent above the State minimum wage at the time of application. (Added 2015, No. 157 (Adj. Sess.), § H.1, eff. Jan. 1, 2017.)

• § 3332. Application; approval criteria

  (a) Application.

  (1) A business may apply for an incentive in one or more years of an award period by submitting an application to the Council in the format the Council specifies for that purpose.

  (2) For each award year the business applies for an incentive, the business shall:

  (A) specify a payroll performance requirement;

  (B) specify a jobs performance requirement or a capital investment performance requirement, or both; and

  (C) provide any other information the Council requires to evaluate the application under this subchapter.

  (b) Mandatory criteria. The Council shall not approve an application unless it finds:

  (1) Except as otherwise provided for an enhanced incentive for a business in a qualifying labor market area under section 3334 of this title, the new revenue the proposed activity would generate to the State would exceed the costs of the activity to the State.

  (2) The host municipality welcomes the new business.

  (3) Pursuant to a self-certification or other documentation the Council requires by rule or procedure, the business attests to the best of its knowledge:

  (A) the business is not a named party to an administrative order, consent decree, or judicial order issued by the State or a subdivision of the State, or if a named party, that the business is in compliance with the terms of such an order or decree;

  (B) the business complies with applicable State laws and rules; and

  (C) the proposed economic activity would conform to applicable town and regional plans and with applicable State laws and rules.

  (4) If the business proposes to expand within a limited local market, an incentive would not give the business an unfair competitive advantage over other Vermont businesses in the same or similar line of business and in the same limited local market.

  (5) But for the incentive, the proposed economic activity:

  (A) would not occur; or

  (B) would occur in a significantly different manner that is significantly less desirable to the State. (Added 2015, No. 157 (Adj. Sess.), § H.1, eff. Jan. 1, 2017; amended 2017, No. 69, § A.1, eff. June 28, 2017; 2021, No. 105 (Adj. Sess.), § 505, eff. July 1, 2022.)

• § 3333. Calculating the value of an incentive

  Except as otherwise provided for an enhanced incentive for a business in a qualifying labor market area under section 3334 of this title or an enhanced incentive for an environmental technology business under section 3335 of this title, the Council shall calculate the value of an incentive for an award year as follows:

  (1) Calculate new revenue growth. To calculate new revenue growth, the Council shall use the cost-benefit model created pursuant to section 3326 of this title to determine the amount by which the new revenue generated by the proposed economic activity to the State exceeds the costs of the activity to the State.

  (2) Calculate the business’s potential share of new revenue growth. Except as otherwise provided for an environmental technology business in section 3335 of this title, to calculate the business’s potential share of new revenue growth, the Council shall multiply the new revenue growth determined under subdivision (1) of this subsection by 80 percent.

  (3) Calculate the incentive percentage. To calculate the incentive percentage, the Council shall divide the business’s potential share of new revenue growth by the sum of the business’s annual payroll performance requirements.

  (4) Calculate qualifying payroll. To calculate qualifying payroll, the Council shall subtract from the payroll performance requirement the projected value of background growth in payroll for the proposed economic activity.

  (5) Calculate the value of the incentive. To calculate the value of the incentive, the Council shall multiply qualifying payroll by the incentive percentage.

  (6) Calculate the amount of the annual installment payments. To calculate the amount of the annual installment payments, the Council shall:

  (A) divide the value of the incentive by five; and

  (B) adjust the value of the first installment payment so that it is proportional to the actual number of days that new qualifying employees are employed in the first year of hire. (Added 2015, No. 157 (Adj. Sess.), § H.1, eff. Jan. 1, 2017; amended 2021, No. 105 (Adj. Sess.), § 506, eff. July 1, 2022.)

• § 3334. Enhanced incentive for a business in a qualifying labor market area

  (a) The Council may increase the value of an incentive for a business that is located in a labor market area in which:

  (1) the average annual unemployment rate is greater than the average annual unemployment rate for the State; or

  (2) the average annual wage is less than the average annual wage for the State.

  (b) In each calendar year, the amount by which the Council may increase the value of all incentives pursuant to this section is:

  (1) $1,500,000.00 for one or more initial approvals; and

  (2) $1,000,000.00 for one or more final approvals.

  (c) The Council may increase the cap imposed in subdivision (b)(2) of this section by not more than $500,000.00 upon application by the Governor to, and approval of, the Joint Fiscal Committee.

  (d) In evaluating the Governor’s request, the Committee shall consider the economic and fiscal condition of the State, including recent revenue forecasts and budget projections.

  (e) The Council shall provide the Committee with testimony, documentation, company-specific data, and any other information the Committee requests to demonstrate that increasing the cap will create an opportunity for return on investment to the State.

  (f) The purpose of the enhanced incentive for a business in a qualifying labor market area is to increase job growth in economically disadvantaged regions of the State, as provided in subsection (a) of this section. (Added 2015, No. 157 (Adj. Sess.), § H.1, eff. Jan. 1, 2017; amended 2017, No. 69, § A.1, eff. June 28, 2017.)

• § 3335. Enhanced incentive for environmental technology business

  (a) As used in this section, an “environmental technology business” means a business that:

  (1) is subject to income taxation in Vermont; and

  (2) seeks an incentive for economic activity in Vermont that the Secretary of Commerce and Community Development certifies is primarily research, design, engineering, development, or manufacturing related to one or more of the following:

  (A) waste management, including waste collection, treatment, disposal, reduction, recycling, and remediation;

  (B) natural resource protection and management, including water and wastewater purification and treatment, air pollution control and prevention or remediation, soil and groundwater protection or remediation, and hazardous waste control or remediation;

  (C) energy efficiency or conservation;

  (D) clean energy, including solar, wind, wave, hydro, geothermal, hydrogen, fuel cells, waste-to-energy, or biomass.

  (b) The Council shall consider and administer an application from an environmental technology business pursuant to the provisions of this subchapter, except that:

  (1) the business’s potential share of new revenue growth shall be 90 percent; and

  (2) to calculate qualifying payroll, the Council shall:

  (A) determine the background growth rate in payroll for the applicable business sector in the award year;

  (B) multiply the business’s full-time payroll for the award year by 20 percent of the background growth rate; and

  (C) subtract the product from the payroll performance requirement for the award year.

  (c) The purpose of the enhanced incentive for an environmental technology business is to promote the growth of businesses in Vermont that both create and sustain high-quality jobs and improve the natural environment. (Added 2015, No. 157 (Adj. Sess.), § H.1, eff. Jan. 1, 2017; amended 2017, No. 69, § A.1, eff. June 28, 2017.)

• § 3336. Repealed. 2019, No. 80, § 16.

• § 3337. Earning an incentive

  (a) Earning an incentive; installment payments.

  (1) A business with an approved application earns the incentive specified for an award year if, within the applicable time period provided in this section, the business:

  (A) maintains or exceeds its base payroll and base employment;

  (B) meets or exceeds the payroll performance requirement specified for the award year; and

  (C) meets or exceeds the jobs performance requirement specified for the award year or the capital investment performance requirement specified for the award year, or both.

  (2) A business that earns an incentive specified for an award year is eligible to receive an installment payment for the year in which it earns the incentive and for each of the next four years in which the business:

  (A) maintains or exceeds its base payroll and base employment;

  (B) maintains or exceeds the payroll performance requirement specified for the award year; and

  (C) if the business earns an incentive by meeting or exceeding the jobs performance target specified for the award year, maintains or exceeds the jobs performance requirement specified for the award year.

  (b) Award year one.

  (1) For award year one, a business has from the date it commences its proposed economic activity through December 31 of that year, plus two additional years, to meet the performance requirements specified for award year one.

  (2) A business that does not meet the performance requirements specified for award year one within this period becomes ineligible to earn incentives for the award year and for all remaining award years in the award period.

  (c) Award years two and three.

  (1) For award year two and award year three, beginning on January 1 of the award year, a business has three years to meet the performance requirements specified for the award year.

  (2) A business that does not meet the performance requirements specified for award year two or for award year three within three years becomes ineligible to earn incentives for the award year and for all remaining award years in the award period.

  (d) Extending the earning period in award years one and two. Notwithstanding subsections (b)-(c) of this section:

  (1) Upon request, the Council may extend the period to earn an incentive for award year one or award year two if it determines:

  (A) a business did not earn the incentive for the award year due to facts or circumstances beyond its control; and

  (B) there is a reasonable likelihood the business will earn the incentive within the extended period.

  (2) The Council may extend the period to earn an incentive:

  (A) for award year one, by two years, reviewed annually; or

  (B) for award year two, by one year.

  (3) If the Council extends the period to earn an incentive, it shall recalculate the value of the incentive using the cost-benefit model and shall adjust the amount of the incentive as is necessary to account for the extension.

  (e) Award year four.

  (1) Beginning on January 1 of award year four, a business that remains eligible to earn incentives has two years to meet the performance requirements specified for award year four.

  (2) A business that does not meet the performance requirements specified for award year four within two years becomes ineligible to earn incentives for award year four and award year five.

  (f) Award year five.

  (1) Beginning on January 1 of award year five, a business that remains eligible to earn incentives has one year to meet the performance requirements specified for award year five.

  (2) A business that does not meet the performance requirements specified for award year five by the end of that award year becomes ineligible to earn the incentive specified for that award year.

  (g) Carrying forward growth that exceeds targets. Carrying forward growth that exceeds targets. If a business exceeds one or more of the payroll performance requirement, the jobs performance requirement, or the capital investment performance requirement specified for an award year, the business may apply the excess payroll, excess jobs, and excess capital investment toward the performance requirement specified for a future award year, provided that the business maintains the excess payroll, excess jobs, or excess capital investment into the future award year. (Added 2015, No. 157 (Adj. Sess.), § H.1, eff. Jan. 1, 2017.)

• § 3338. Claiming an incentive; annual filing with Department of Taxes

  (a) On or before April 30 following each year of the utilization period, a business with an approved application shall submit an incentive claim to the Department of Taxes.

  (b) A business shall include:

  (1) the information the Department requires, including the information required in section 5842 of this title and other documentation concerning payroll, jobs, and capital investment necessary to determine whether the business earned the incentive specified for an award year and any installment payment for which the business is eligible; and

  (2) a self-certification or other documentation the Department requires by rule or procedure, by which the business attests to the best of its knowledge that:

  (A) the business is not a named party to an administrative order, consent decree, or judicial order issued by the State or a subdivision of the State, or if a named party, that the business is in compliance with the terms of such an order or decree; and

  (B) the business complies with applicable State laws and regulations.

  (c) The Department may consider an incomplete claim to be timely filed if the business files a complete claim within the additional time allowed by the Department in its discretion.

  (d) Upon finalizing its review of a complete claim, the Department shall:

  (1) notify the business and the Council whether the business is entitled to an installment payment for the applicable year; and

  (2) make an installment payment to which the business is entitled.

  (e) The Department shall not pay interest on any amounts it holds or pays for an incentive or installment payment pursuant to this subchapter. (Added 2015, No. 157 (Adj. Sess.), § H.1, eff. Jan. 1, 2017; amended 2017, No. 69, § A.1, eff. June 28, 2017.)

• § 3339. Recapture; reduction; repayment

  (a) Recapture.

  (1) The Department of Taxes may recapture the value of one or more installment payments a business has claimed, with interest, if:

  (A) the business fails to file a claim as required in section 3338 of this title;

  (B) during the utilization period, the business experiences:

  (i) a 90 percent or greater reduction from base employment; or

  (ii) if it had no jobs at the time of application, a 90 percent or greater reduction from the sum of its job performance requirements; or

  (C) the Department determines that during the application or claims process the business knowingly made a false attestation that the business:

  (i) was not a named party to, or was in compliance with, an administrative order, consent decree, or judicial order issued by the State or a subdivision of the State; or

  (ii) was in compliance with State laws and rules.

  (2) If the Department determines that a business is subject to recapture under subdivision (1) of this subsection, the business becomes ineligible to earn or claim an additional incentive or installment payment for the remainder of the utilization period.

  (3) Notwithstanding any other statute of limitations, the Department may commence a proceeding to recapture amounts under subdivision (1) of this subsection as follows:

  (A) under subdivision (1)(A) of this subsection (a), not later than three years from the last day of the utilization period; and

  (B) under subdivision (1)(B) of this subsection (a), not later than three years from date the business experiences the reduction from base employment, or three years from the last day of the utilization period, whichever occurs first.

  (b) Reduction; recapture. If a business fails to make capital investments that equal or exceed the sum of its capital investment performance requirements by the end of the award period:

  (1) The Department shall:

  (A) calculate a reduced incentive by multiplying the combined value of the business’s award period incentives by the same proportion that the business’s total actual capital investments bear to the sum of its capital investment performance requirements; and

  (B) reduce the value of any remaining installment payments for which the business is eligible by the same proportion.

  (2) If the value of the installment payments the business has already received exceeds the value of the reduced incentive, then:

  (A) the business becomes ineligible to claim any additional installment payments for the award period; and

  (B) the Department shall recapture the amount by which the value of the installment payments the business has already received exceeds the value of the reduced incentive.

  (c) Tax liability.

  (1) A person who has the duty and authority to remit taxes under this title shall be personally liable for an installment payment that is subject to recapture under this section.

  (2) For purposes of this section, the Department of Taxes may use any enforcement or collection action available for taxes owed pursuant to chapter 151 of this title. (Added 2015, No. 157 (Adj. Sess.), § H.1, eff. Jan. 1, 2017; amended 2017, No. 69, § A.1, eff. June 28, 2017; 2021, No. 105 (Adj. Sess.), § 507, eff. July 1, 2022.)

• § 3340. Reporting

  (a) On or before September 1 of each year, the Vermont Economic Progress Council and the Department of Taxes shall submit a joint report on the incentives authorized in this subchapter to the House Committees on Ways and Means, on Commerce and Economic Development, and on Appropriations, to the Senate Committees on Finance, on Economic Development, Housing and General Affairs, and on Appropriations, and to the Joint Fiscal Committee.

  (b) The Council and the Department shall include in the joint report:

  (1) the total amount of incentives authorized during the preceding year;

  (2) with respect to each business with an approved application:

  (A) the date and amount of authorization;

  (B) the calendar year or years in which the authorization is expected to be exercised;

  (C) whether the authorization is active; and

  (D) the date the authorization will expire; and

  (3) the following aggregate information:

  (A) the number of claims and incentive payments made in the current and prior claim years;

  (B) the number of qualifying jobs; and

  (C) the amount of new payroll and capital investment.

  (c) The Council and the Department shall present data and information in the joint report in a searchable format.

  (d) Notwithstanding any provision of law to the contrary, an incentive awarded pursuant to this subchapter shall be treated as a tax expenditure for purposes of chapter 5 of this title. (Added 2015, No. 157 (Adj. Sess.), § H.1, eff. Jan. 1, 2017.)

• § 3341. Confidentiality of proprietary business information

  (a) The Vermont Economic Progress Council and the Department of Taxes shall use measures to protect proprietary financial information, including reporting information in an aggregate form.

  (b) Information and materials submitted by a business concerning its income taxes and other confidential financial information shall not be subject to public disclosure under the State’s public records law in 1 V.S.A. chapter 5, but shall be available to the Joint Fiscal Office or its agent upon authorization of the Joint Fiscal Committee or a standing committee of the General Assembly, and shall also be available to the Auditor of Accounts in connection with the performance of duties under section 163 of this title; provided, however, that the Joint Fiscal Office or its agent and the Auditor of Accounts shall not disclose, directly or indirectly, to any person any proprietary business information or any information that would identify a business except in accordance with a judicial order or as otherwise specifically provided by law.

  (c) Nothing in this section shall be construed to prohibit the publication of statistical information, rulings, determinations, reports, opinions, policies, or other information so long as the data are disclosed in a form that cannot identify or be associated with a particular business. (Added 2015, No. 157 (Adj. Sess.), § H.1, eff. Jan. 1, 2017.)

• § 3342. Annual program cap

  (a) In each calendar year the Vermont Economic Progress Council may approve one or more incentives under this subchapter, the total value of which shall not exceed:

  (1) $15,000,000.00 for one or more initial approvals; and

  (2) $10,000,000.00 for one or more final approvals.

  (b) The Council may increase the cap imposed in subdivision (a)(2) of this section by not more than $5,000,000.00 upon application by the Governor to, and approval of, the Joint Fiscal Committee.

  (c) In evaluating the Governor’s request, the Committee shall consider the economic and fiscal condition of the State, including recent revenue forecasts and budget projections.

  (d) The Council shall provide the Committee with testimony, documentation, company-specific data, and any other information the Committee requests to demonstrate that increasing the cap will create an opportunity for return on investment to the State. (Added 2015, No. 157 (Adj. Sess.), § H.1, eff. Jan. 1, 2017.)