The Idaho Supreme Court on Friday restored a lawsuit against the state of Idaho over a tax incentive program for new or expanding companies.
Employers Resource Management Co. of Boise sued in 2016 after officials gave a tax incentive to Paylocity, an Illinois company and competitor establishing a new office here.
The incentive came through the state’s Tax Reimbursement Incentive Program, created by the Legislature in 2014. In this case, Idaho agreed to refund Paylocity $6.5 million in income, payroll and sales tax over 15 years.
George Gersema, founder and CEO of Employers Resource, thought it unfair that state officials gave such an advantage to a competitor.
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“Not only does Paylocity get my tax dollars, now I have to compete with them for employees, since they do much of the same kind of work I do,” he told the Statesman in January 2016. “Well, gee whiz, thank you, Legislature of the state of Idaho. Thank you very much.”
Two months later, he sued Megan Ronk, director of the Idaho Department of Commerce. But Ada County 4th District Judge Samuel Hoagland dismissed the lawsuit, concluding Gersema’s company didn’t have standing to pursue it.
That’s not the case, the Supreme Court unanimously ruled.
The justices did not remark on the merits of Gersema’s suit, saying only that the case meets the court’s requirements to proceed. The government’s action on behalf of Paylocity gave Employers Resource some standing, the court’s opinion states.
“In our view, increased competition — so long as it is on a level playing field — does not provide a basis for judicial intervention,” the opinion states. “That is not the case, however, when there is governmental action that alters the competitive landscape by providing an advantage to an economic competitor.”
The lawsuit now returns to district court.