Boise business sues Idaho over business tax incentive

A Boise human-resource services business went to court Wednesday to void a $6.5 million tax break by the state for an Illinois company planning to expand to Boise.

George Gersema, owner and CEO of Employers Resource, said he sued to protect his company against Paylocity, which he said could use its reimbursed tax money to offer higher salaries and lure Employers Resource employees. Gersema said he also hopes to strike a larger blow to the state’s Tax Reimbursement Incentive, created in 2014.

The incentive repays qualified companies up to 30 percent of their income, sales and payroll tax for up to 15 years. The companies must meet job creation and wage thresholds to receive reimbursement.

Paylocity said it would create 551 jobs paying an average of $46,200 a year in exchange for the tax break.

“This is just bad public policy,” Gersema said. “This is now how we should treat taxpayer money.”

Gersema told the Statesman in January that Idaho was giving an unfair advantage to a competitor.

The lawsuit was filed in Ada County’s Fourth Judicial District court, naming Megan Ronk, director of the Idaho Department of Commerce, as defendant. The department runs the incentive program. The lawsuit claims the constitution grants the Legislature alone the power to determine how to use tax dollars.

Ronk, who succeeded TRI champion Jeff Sayer as director in January, declined to comment.

The state just awarded a $3.9 million tax break given to for-profit Idaho College of Osteopathic Medicine planned for Meridian.

Emails obtained through a public records request showed that an Idaho osteopathic physicians group urged the state to move quickly, the Associated Press reported. Gersema said the speed of the college’s incentive package shows disregard for taxpayer dollars.

“If this lawsuit is successful, it calls into question all of the tax reimbursements they’ve given, including to the medical school,” Gersema said. “The Legislature knows it has a problem, but they are trying to whistle past the graveyard and not deal with it.”

This story was originally published March 23, 2016 at 3:17 PM with the headline "Boise business sues Idaho over business tax incentive."