How Enterprising: A Million-Dollar Handout to GlobalFoundries | Fair Game | Seven Days | Vermont's Independent Voice

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How Enterprising: A Million-Dollar Handout to GlobalFoundries


Fair Game is Seven Days’ weekly political column.
Gov. Peter Shumlin delivers his final State of the State address last Thursday at the Statehouse - JEB WALLACE BRODEUR
  • Jeb Wallace Brodeur
  • Gov. Peter Shumlin delivers his final State of the State address last Thursday at the Statehouse

In one of the few surprises of his final State of the State address last Thursday, Gov. Peter Shumlin revealed the name of a Canadian company establishing a beachhead in St. Johnsbury. Thanks, in part, to a $200,000 award from the Vermont Enterprise Fund, he said, Composites BHS would create 75 new manufacturing jobs in the hard-pressed Northeast Kingdom community.

Left unsaid: The next morning, Shumlin and leading legislators would award $1 million from that same fund to GlobalFoundries, the Emirate of Abu Dhabi-owned corporation which last year acquired IBM's chip-making business — and its massive plant in Essex Junction.

The helping handout prompted rank-and-file legislators from all three parties to revolt, and more than 50 of them signed a letter questioning its wisdom. Given the state's budget crunch, they wrote, "We respectfully request that you table any decision to spend the remaining Enterprise Fund dollars at this time."

"The idea that we have to give $1 million to GlobalFoundries to keep these jobs online — I just don't get it," says Rep. Chris Pearson (P-Burlington), who authored the letter, noting that IBM paid the Emirati company $1.5 billion to take the chip biz off its hands. "This is the modern corporate model: to take as much money out of local governments as possible."

The Emergency Board, which includes four top legislators and is chaired by the governor, didn't buy that argument. It voted 3-1 Friday morning to cut GlobalFoundries two $500,000 checks. The sole nay came from Rep. Mitzi Johnson (D-South Hero), the House Appropriations Committee chair, who said that the secretive process "didn't feel right" and the money could have been better spent.

Shumlin appeared to relish the dustup. Speaking at a Lake Champlain Regional Chamber of Commerce breakfast Monday morning, the gov balked at his critics' concerns, saying that state government "better do everything we can" to keep the Essex Junction plant competitive.

"You know, I got a letter from I don't know how many legislators saying, 'Nah, you know, don't do this. It's a bad idea. You know, we've got budget problems,'" Shumlin told the audience, his voice dripping with sarcasm. "I'm like, 'Really?'"

Noting the fiscal impact GlobalFoundries' departure would have on the state, Shumlin said, "You think a million bucks is a budget challenge? You know, get your head out of the sand!"

The business leaders clapped in approval.

No doubt Shummy enjoyed framing himself as the great business savior — standing up to a foolish legislature out to sabotage economic development. But the episode may threaten the very existence of the enterprise fund, which was created two years ago as rumors swirled that IBM might exit the chip business or even shutter its Vermont operation. And that could hurt smaller businesses, such as Composites BHS or GW Plastics, the latter of which received $500,000 from the fund and plans to create 73 new jobs in Royalton.

"It's been helpful to have a spotlight on it, given that I don't think it should be continued," says Rep. Janet Ancel (D-Calais), who chairs the House Ways and Means Committee and serves on the Emergency Board. The fund is set to expire at the end of this fiscal year, but Shumlin vowed in his State of the State to "enhance and extend it."

Though she's long opposed the enterprise fund, Ancel voted to dole out the money to GlobalFoundries last Friday because, she says, it was clear from the start that it was created primarily to support IBM or its successor.

"It felt to me that we'd made a commitment to do this, and we needed to honor it," she says. "That said, I think the enterprise fund is a mistake, and I very strongly oppose expanding and extending it."

State Auditor Doug Hoffer, a Democrat and Progressive, agrees.

"If you choose to spend a million dollars on this, you are by definition not spending it on something else," he says. "Is it creating new jobs? The answer is no."

GlobalFoundries says as much. According to spokesman Jim Keller, the company invested $55 million in its Essex Junction plant last year and plans to put up another $17 million this year. Together, he says, those improvements will result in 100 temporary jobs becoming permanent.

How many jobs will Vermont's $1 million handout create?

"I don't think you can directly relate it to new jobs," he says. "I can't quantify it that way."

Sen. Tim Ashe (D/P-Chittenden), ever the contrarian, says the legislators who signed the letter shouldn't pat themselves on the back too much.

"It was a shiny object for the legislature to take a swing at," the Senate Finance Committee chair and Emergency Board member said, arguing that the fund is just the tip of the iceberg of corporate handouts. "My request to all the people who signed it is to take a look at all those programs and give them a rigorous look."

Graff Track

Former Politico Magazine editor Garrett Graff says he'll make up his mind later this month about seeking the Democratic nomination for lieutenant governor. Meanwhile, the chair of the Senate Committee on Government Operations says she's hoping to pass legislation making clear that Graff's not eligible to run.

Sen. Jeanette White (D-Windham) says she drafted a bill clarifying the state's constitutional residency requirements following a "big brouhaha" last November over Graff's eligibility. The 34-year-old Montpelier native returned to Vermont that month to explore a run for public office, after 11 years in Washington, D.C.

According to the Vermont Constitution, candidates for governor and lieutenant governor "shall have resided in this State four years next preceding the day of the election." Graff has argued that he meets that definition, having maintained his Vermont voter registration, car registration and driver's license.

Neither Secretary of State Jim Condos nor Attorney General Bill Sorrell has formally weighed in on Graff's eligibility, but both of their offices have said they think the Constitution is clear that, as Condos puts it, "You have to live here."

That doesn't mean a potential candidate "may never spend the night beyond physical confines of the borders of the state," says Assistant Attorney General Michael Duane. But, he adds, "We believe the framers wanted to ensure that the person holding those high offices resided in Vermont in the common-sense use of that term for four years before being eligible."

White agrees but would like to clarify the matter in statute. Her bill would require such candidates to certify that they'd actually lived in Vermont for four years.

Graff has also been seeking clarification. In a December 14 letter to Condos, Graff attorney Paul Gillies requested "a formal, written decision" clarifying whether his client was eligible. Included in the request was an affidavit from Graff attesting to his residency and a three-page legal argument from Gillies.

In a written response, Condos said it was up to the courts — not him or Sorrell — to settle the matter, should anyone challenge Graff's residency.

How serious Graff is about running remains unclear. On December 23, he filed a candidate registration statement required of those who raise or spend more than $500 on electoral activities, but he wrote "I don't know" next to the question, "Running in this election?"

"I honestly have not made a decision whether I'm going to run," he told Seven Days Monday. "I am trying to figure out what the best way that I can serve and make a difference in the state of Vermont is."

But in the sworn affidavit he sent Condos last month, Graff sounded a little more certain.

"I am a candidate for the Democratic nomination for Lieutenant Governor," he wrote. "I intend to file my nomination petitions at the end of April with the Vermont Secretary of State's Office."

Graff would face Sen. David Zuckerman (P/D-Chittenden), Rep. Kesha Ram (D-Burlington) and Marlboro businessman Brandon Riker in the Democratic primary. Republican Randy Brock and independent Louis Meyers have also entered the race.

Even if he's deemed eligible, Graff may have trouble explaining his spotty voting record as he asks for support. Though he cites his Vermont registration as evidence of his residency, the longtime political operative, reporter and editor has rarely cast a ballot in recent years.

According to Montpelier City Clerk John Odum, Graff hasn't voted in a state primary election since 2002, on Town Meeting Day since 2004 and in a general election since 2010. Graff certified in his affidavit that he's never voted outside of Montpelier.

"Look, when I've been out talking to Vermonters and to Democratic Party leaders, nobody is asking me about my voting record or my driver's license," the would-be candidate says. "They know I'm a Vermonter. They know I know how many teats a cow has. And the thing they really care about is talking about the future of Vermont and how we tackle the really monumental challenges the state faces ahead."

Evidently, Graff has not been chatting with White.

"I think it's a little bit ballsy," she says. "I mean, come on! The guy hasn't lived here for, I don't know, 10 years!"

Media Notes

Just in time for the start of the legislative session, the Burlington Free Press has hired a second reporter to cover the Statehouse. Jess Aloe, who received a master's in journalism last year from Emerson College, replaces Paris Achen, who left last September after seven months on the beat.

Aloe joins reporter April Burbank on the paper's three-member "accountability" team, which also lost veteran reporter Mike Donoghue to retirement last October. According to publisher Al Getler, the Freeps does intend to fill the third position, but not until it names a new executive editor to replace Mike Townsend, who also retired last October. Realistically, Getler says, that delays the new reporter hire until March or April.

Turning to the cops and courts beat, newly named Rutland Herald and Barre-Montpelier Times Argus publisher Catherine Nelson pleaded no contest Monday in Rutland criminal court to driving under the influence and leaving the scene of an accident.

According to a Rutland City Police affidavit, the day after Christmas Nelson crashed her company-owned Nissan SUV into the porch of a downtown Rutland home, a guardrail and, finally, the Westminster Cracker Company. She ditched the vehicle and returned to her nearby apartment, according to the affidavit, and later lied to police about her involvement in the incident.

Nelson finally admitted that she had been drinking with a man named Henry Hance, a habitual offender who, according to the Herald, has been convicted of more than a dozen DUI and drug charges, along with assault, arson and grand larceny. An hour and a half after her own DUI, Nelson blew twice the legal limit.

Two days after her arrest, Herald and TA owner John Mitchell named her to succeed him as publisher of the two papers. He later said he was aware of the incident when he announced her promotion from vice president and CEO.

"Catherine has a long track record of service and leadership to the Rutland and Barre-Montpelier communities, and feels badly about this," he tells Seven Days. "She is showing us all the kind of person she is by taking responsibility for her actions."

On Monday, Nelson received two suspended sentences of three to 12 months and was ordered to perform 50 hours of community service. Her attorney, John J. Welch, said she "is very grateful no one was hurt."

Disclosure: Tim Ashe is the domestic partner of Seven Days publisher and coeditor Paula Routly.