Tax department warns refundable machinery-and-equipment credit would create general-fund exposure; St. Johnsbury manufacturer urges refundable change

The Senate Finance Committee on Feb. 11 heard competing views on S.312, a bill that would affect a machinery-and-equipment investment tax credit. Rebecca Samaroff, deputy commissioner of the Vermont Department of Taxes, told senators converting the credit to a refundable corporate credit would be "unconventional" because Vermont currently has no refundable corporate credits and that the refundable component creates direct general-fund exposure.

"As drafted, I would say a minimum of $500,000 a year outlay from the general fund would be available for folks that meet the eligibility requirements for this credit," Samaroff said, explaining that carryforwards or a mixed refundable/nonrefundable design could alter that estimate.

Weidman — a U.S. subsidiary operating a St. Johnsbury factory that produces transformer insulation — urged a refundable option because corporate-tax reforms (adoption of single-sales-factor apportionment and repeal of throwback rules in 2023) left its facility without sufficient in-state tax liability to use previously awarded nonrefundable credits. Carol Martin, head of corporate accounting for Weidman, said the company had been awarded $3,260,000 in nonrefundable credits on a $32,000,000 investment but has not been able to utilize them.

Martin outlined Weidman’s "Bigfoot" expansion project, describing a first-phase 40% capacity increase and a second-phase components expansion; she said the expansion supports roughly 374 full-time positions at the end of last year and will create about 67 additional jobs associated with the project. The company cited $169 million in Vermont wages over the past decade and said the Bigfoot construction phase will pay about $7 million to Vermont vendors.

Senators acknowledged the company's local investments but expressed concern that turning the credit refundable would effectively function as a state appropriation or grant to the company. Several members noted that prior tax-code changes already provided significant benefits to similar firms and urged caution given current fiscal constraints and competing priorities such as health care and education funding.

Committee members proposed exploring alternative structures that would attach incentives to additional local investment or growth and suggested coordinating with the Agency of Commerce and Community Development and appropriations staff to design terms that protect state fiscal interests while supporting employment in the Northeast Kingdom.

The committee did not take immediate action on S.312. Members said they would consult appropriations and Commerce staff and consider potential statutory language that could tie benefits to demonstrable local growth or guardrails on general-fund exposure.