Silence.

Deafening and bill-killing silence.

That’s what backers of a bill to stop the state Land Board from buying and running businesses were treated to after testimony concluded on their measure to end the practice.

After two days of testimony on House Bill 495, senators killed the measure because no motion was made on the measure.
Committee chair Monty Pearce, R-New Plymouth, ruled the bill held after a few minutes of silence.

Last year, an identical bill fell on deaf ears when a House committee chair refused to hear it, saying it was not needed. This year, the measure cleared the House on a 63-3 vote before being muted in the Senate panel.

The legislation was pitched by Reps. John Vander Woude, R-Nampa, and Grant Burgoyne, D-Boise. In testimony Monday, the duo noted that when the state buys a private business, local governments, including schools, are hurt because the property is taken off tax rolls.

Vander Woude, a business owner himself, said that government purchase of businesses unfairly harms the free market because government doesn’t pay the same taxes and fees private companies do. “Any business will have a difficult time competing with all these disadvantages against it,” warned Vande Woude.

Vander Woude also opposed the practice on ideological grounds. “What’s the proper role of government?” he asked. “To be in direct competition with the private sector?”

The bill was spurred by the Idaho Department of Lands’ (IDL) 2010 purchase of a commercial storage rental facility in Boise. The business, Affordable Storage, cost the department $2.7 million. The legislation would have forced the agency to sell the business and not buy any more companies.

The bill would not have forced the state to sell the numerous commercial office buildings and parking garages it owns in downtown Boise.

IDL director Tom Schultz, speaking on behalf of his department and the Land Board, opposed the legislation, explaining that the storage facility purchase meets the panel’s responsibility to maximize returns. While critics have argued commercial properties have returned little more than 1 percent through the last 10 years, Schultz says Affordable Storage has returned about 8 percent since its purchase.

“We’re trying to carry out our constitutional duties,” Schultz said. “The returns on this investment have outpaved anything else that we’ve done.”

The Land Board voted 3-1 last week to oppose the legislation. The panel suggested any legislative attempt to control the board’s authority might be unconstitutional. Attorney General Lawrence Wasden was there in opposition to the legislation, which is key because he could have sued the Legislature over the bill.

Schultz rebuffed criticism that the investment strategy is socialism. “We don’t directly run the businesses,” he said. “That’s all done through third parties. We pay for professional services to run those commercial assets.”

But Jason Hancock, representing Superintendent of Public Instruction Tom Luna, the lone dissenter in the board’s vote, said that allowing the state to buy businesses could be a slippery slope that lawmakers shouldn’t pursue.

To make his point, Hancock suggested the state buy and run some McDonald’s restaurants to make some money. “They seem to make money all the time,” Hancock said. “They never go out of business.”