Taxes, workforce development, water permits and business incentives are expected to highlight the 2014 session, which starts today. Here’s a list of items lobbyists plan to push for this year.
1. INCREASING THE PERSONAL PROPERTY TAX EXEMPTIONLast year business groups, including the Idaho Association of Commerce and Industry, won a battle in a decadeslong war over this tax on most property that isn’t land or a permanent building.
The passage of House Bill 315 exempted Idaho businesses from paying up to $100,000 owed for the tax in each county where a business operates. The bill also exempted all items purchased for less than $3,000.
That exempted 90 percent of Idaho businesses from paying the tax, but it still didn’t go far enough, IACI President Alex LaBeau said.
“Personal property tax is extremely burdensome,” LaBeau said. “We call it ‘the investment penalty.’”
The tax is certainly burdensome to Pacific Steel & Recycling, Chief Operating Officer Tim Culliton said. Pacific, which employs 266 workers at 15 locations in 10 Idaho counties, purchased $10.5 million worth of personal property in 2012, including a piece of metal-cutting equipment at its Nampa site that cost about $2.5 million, he said. Pacific paid $64,000 in personal property tax on that machine alone as part of its $530,000 tab for the tax statewide in 2012.
IACI will propose that the exemption threshold be extended to $250,000 with an option for each county to waive the tax altogether. The Boise Metro Chamber of Commerce will lobby to increase the exemption threshold to $500,000.
Either would encourage Pacific to increase business, Culliton said.
“It is a lot of money,” he said. “Anytime you can reduce your tax bill, it gives you a chance to grow your business, buy new equipment, add personnel and all of those things.”
Raising the threshold to $250,000 would have increased the amount the state reimbursed to counties to more than $27 million, according to the tax commission.
Rep. Gary Collins, R-Nampa, said House Bill 315 is “a good start.” Speaking at a Nampa Chamber of Commerce luncheon previewing the session, Collins said he supports the movement to increase the personal property tax threshold, but the Legislature must remain mindful of counties’ needs to replace the lost revenue.
“These dollars have to be replaced with something,” he said. “Either they come out of the general fund or local entities will have to raise taxes.”
2. PROTECT COMMON COREBusinesses seeking qualified employees will closely watch how lawmakers deal with potential attacks on Common Core, a set of standards for what students should know and be able to do by the time they leave high school.
Business groups such as IACI and Idaho Business for Education say the rigorous standards, adopted by 45 states, including Idaho, will contribute to a better educated workforce. Idaho Labor Department Director Ken Edmunds told legislators Thursday, “Employers are saying they are not getting the employees they need at any level, as far as skills.”
Critics, including some lawmakers and parents, have raised issues with Idaho Core Standards, the state's version of Common Core, complaining about protection of student personal information in test data and a lessening of local involvement in setting the education goals. But Common Core is widely supported among lawmakers, and Gov. Butch Otter said Friday that moving forward with Common Core will be the No. 1 issue this session.
That’s good news for business groups, LaBeau said.
“Continuing with Common Core will dominate what the Legislature will deal with, and appropriately so,” he said.
3. BRING WASTEWATER-PERMITTING POWER TO IDAHOIdaho is one of four states without their own programs to issue runoff permits ensuring compliance with federal pollution rules, LaBeau said. The U.S. Environmental Protection Agency issues the permits to cities and to industrial and aquacultural water users for wastewater runoff, farming, construction projects and other uses.
LaBeau said the Idaho Department of Environmental Quality would better serve the state’s cities and businesses.
“(State control) is flexibility. It’s speed,” LaBeau said. “It typically nets out to be a less expensive program when states manage it.”
Rep. Brent Crane, R-Nampa, said EPA regulations hinder Idaho businesses, especially agriculture. “The idea is for DEQ to be a firewall between the EPA and (Idaho water users),” he said at the Nampa luncheon.
Establishing jurisdiction would be gradual, LaBeau said. He will lobby the Legislature to appropriate $300,000 to hire three full-time DEQ employees to start the transition. To completely take over, the state would need to add 23 to 25 employees, which would run between $2.5 million and $2.9 million once completed, LaBeau said.
House Speaker Scott Bedke, R-Oakley, said he supports establishing state primacy. “It’s a pressing enough issue that we very well may see a bill,” Bedke said.
4. ENACT A JOB-CREATION INCENTIVELawmakers and lobbyists expect Idaho Department of Commerce Director Jeff Sayer to push for a corporate income-tax reimbursement system similar to those used in Utah and other states.
Sen. Todd Lakey, R-Nampa, said such programs reward businesses that create jobs in the state by relocating here or expanding existing Idaho operations. Businesses are reimbursed up to 30 percent of their corporate income tax. Companies must meet a relatively high average employee wageto qualify.
The idea, Lakey said, is that by creating jobs with relatively high wages, companies are creating new wealth among employees that the state can collect via personal income taxes. The end result is the state gets 70 percent of the tax money compared with getting nothing if the company never created jobs, Lakey said.
“This is an exciting opportunity that will help us be competitive,” Lakey said.
5. LOWER CORPORATE INCOME TAX RATESMost proponents of the tax reimbursement plan will also support the Idaho Chamber Alliance’s effort to lower the state’s corporate income tax from a region-high 7.4 percent, even if the rate is only lowered to match Montana’s 6.9 percent.
Doing so would turn a mark against Idaho in the eyes of many businesses into a positive, Alliance lobbyist John Watts said.
“Income tax rates are the very first thing companies look at when deciding whether or not to come here,” Watts said.
6. REPLENISH THE ‘CLOSING FUND’Last year, Sayer asked for and received $3 million for his department’s Business Opportunity Fund. Called the “closing fund” because it serves as the final carrot in pitches for companies to relocate to Idaho, the fund pays for infrastructure improvements to accommodate an incoming business, such as extending roads and sewer lines.
The state has set aside an $800,000 grant for Clif Bar’s planned Twin Falls plant. Clif Bar can receive some or all of that money after meeting milestones for metrics such as jobs created and capital invested. Commerce is negotiating those conditions with Clif Bar and Twin Falls.
LaBeau said he expects Sayer to ask lawmakers to replenish the fund and perhaps bolster it.
7. BUT WHAT ABOUT …Lobbyists don’t expect to get everything on their wish lists.
In December, Gov. Butch Otter said he planned to put off any action on a pair of hot-button issues supported by business: increasing transportation funding and expanding Medicaid coverage to 100,000 Idahoans.
The issues would likely be controversial, and Otter, who is facing re-election this year, said he wants a shorter session with less strife.
The Idaho Transportation Coalition, which represents industries that depend on public roads, wanted to raise $262 million this year for road projects. The funding push was a result of Otter’s failed attempt to raise $174 million for roads in 2009.
The Chamber Alliance was among the groups that supported funding roads projects.
“It’s discouraging,” Watts said. “Issues get put off, but they don’t go away.”
Expanding Medicaid coverage would save between $12 million and $18 million a year in penalties established by the Affordable Health Care Act for large Idaho employers currently not providing health insurance for low-wage employees, according to IACI.
On Friday, Senate Minority Leader Michelle Stennett, D-Ketchum, said she hopes the Legislature will discuss Medicaid expansion even if members are resigned to delay a vote until a later year.
“I think it’s reckless for our people, frankly,” she said.
Zach Kyle: 377-6464Twitter: @IDS_zachkyle