Tax incentive proposal clears first Idaho Senate hurdle

zkyle@idahostatesman.comMarch 11, 2014 

A bill aimed at promoting job growth by reimbursing businesses for creating jobs advanced Tuesday to the Senate.

The bill would reward businesses meeting job-creation thresholds — 20 new jobs in rural areas and 50 in urban areas - with a rebate of up to 30 percent of their state corporate income, sales and payroll taxes.

Idaho Department of Commerce Director Jeff Sayer, who presented the bill, fielded questions from the Senate Local Government and Taxation Committee about whether safeguards were in place to limit the power of the seven-member Economic Advisory Board that would make final decisions on which companies would and wouldn't receive reimbursement agreements. The bill has no mechanism to appeal decisions.

"Where are we heading with this?" asked Sen. Elliott Werk, D-Boise. "There's some issues out there of people talking about cronyism, about who will be making these decisions or making decisions that cannot be appealed."

Sayer said Commerce will build transparency into the process by disclosing all terms and conditions, including the number of new jobs created, negotiated with every company receiving tax reimbursements.

Sayer said that the bill, House Bill 546, is needed so Commerce can have something extra to offer after out-of-state companies narrow their possible destinations to a few states. "The bottom line is, if we don't offer incentives, other people will," Sayer said.

Mike Ferguson, director of the Idaho Center for Fiscal Policy, used Chobani's decision to build a plant in Twin Falls in 2012 to illustrate a point that the credit could cause harm while accomplishing little.

"I'm pretty certain that yogurt maker would have received the credit," Ferguson said. "I'm pretty certain it would have been touted as a success of the program. However... we can't be sure of that. But we do know such a firm located here without this credit and essentially invested $500 million and created 500 jobs. I know for certain, if they'd accepted this credit, the state would have less money to fund services."

Chris Guill spoke on behalf of his employer, biomass energy producer Blue Sun Energy. He said Blue Sun built its first plant in Missouri in part because of the state's tax incentive program at the time. Now, the company is looking for a location for a second plant — and it's looking at Idaho. "This sort of bill will put Idaho on the map in terms of our decision-making process," Guill said.

The bill has already passed in the House and now moves to the Senate on a 7-2 vote. Republicans Dan Johnson and Cliff Bayer voted against the bill.

Senate Pro Tem Brent Hill said he grudgingly supported the bill.

"I've made no secret to you or anyone else that I don't like things like this," Hill said. "I don't like to get in bidding wars with other states... I've voted against job incentive bills. But I've also gone around other states, talking with counterparts from other states, and I know we have to compete. That means more than just providing a stable tax structure or good education."

Zach Kyle: 377-6464, Twitter: @IDS_zachkyle

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