A food processing plant that has received hundreds of thousands of dollars in taxpayer subsidies in the past few years announced that it will close next year, a move that will cost at least 400 jobs.
As taxpayer losses mount, concerns about the subsidies are growing with several lawmakers saying they’d like to review the spending during the coming 2014 legislative session.
The H.J. Heinz Company announced last week that it will shutter its Pocatello facility next year, one of three plants the business will close in North America. The eastern Idaho facility produces frozen food and snacks. The Heinz factory is one of Pocatello’s top 11 employers.
While city and local economic development officials scramble to find another business to fill the soon-to-be-unoccupied facility, the closures stands as another loss for Idaho taxpayers
Records turned over to IdahoReporter.com by the Idaho Department of Labor reveal that the state has given Heinz more than $880,000 in working training subsidies, issued through the Idaho Workforce Development Fund, since August 2003.
The cash funded worker training for 454 workers, according to the department’s records.
After 16 years and more than $62 million in dollars spent, the Idaho Department of Labor in October 2012 issued a report giving a 40 percent “effectiveness” rate for the statewide job training program. The fund provides millions of dollars annually to myriad Idaho employers, including Idaho Power, Chobani and Biolife Plasma Services.
Created by the Legislature in 1996, the Idaho Workforce Development Fund is overseen by the labor department and was re-authorized in 2010. The fund is financed with a 3 percent offset paid by Idaho businesses to the state unemployment insurance fund, according to the department.
The training fund is overseen by a 32-member council, a statewide task force comprised of individuals from both the public and private sector who are appointed by the governor.
The program has a mixed record of success, though. According to the 2012 report, the state has given more than $5 million since 1996 to companies that have either gone out of businesses or no longer operate in Idaho.
The failures include a debacle in Pocatello. Earlier this year, Hoku Corp., a polysilicon manufacturer, scuttled plans to build a $600 million facility in the city. The state, through the Workforce Development Fund, gave Hoku more than $650,000.
As the losses mount, some state lawmakers are calling for a comprehensive review of the program and its spending.
Sen. Cliff Bayer, R-Boise, for example, told IdahoReporter.com in September that he would support an oversight hearing into the program to ensure it’s a worthwhile initiative.
Senate Assistant Majority Leader Chuck Winder, R-Boise, state Reps. John Vande Woude, R-Nampa, and Paul Romrell, R-St. Anthony, have also backed investigating the program.
“I definitely think that ought to be looked into,” Romrell told IdahoReporter.com earlier this week.
Idaho has no way to ask companies for repayment if they close, something Romrell suggested would be difficult after a company shuts its door. “I don’t know how you get a handle on that,” he said.
The freshman Republican also said that the program might give some businesses a taxpayer-funded advantage in the marketplace.
Program proponents defend the corporate subsidies, saying that even though the companies went out of businesses, the money still helped fund training and created a positive economic flow.
One of the program’s loudest critics, though, believes legislators need to scuttle the subsidies.
“It's a terrible program," Idaho Freedom Foundation President Wayne Hoffman told the Idaho Statesman just days ago. "It wastes more money than it does any good. Obviously, it's a cost borne by Idaho businesses throughout Idaho, and employees."
Note: The Idaho Freedom Foundation publishes IdahoReporter.com.