Commerce director: Idaho needs more incentives to attract businesses to state

Commerce director: Idaho needs more incentives to attract businesses to state

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Idaho Freedom Foundation staff
February 22, 2014
Idaho Freedom Foundation staff
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February 22, 2014
[post_thumbnail] Jeff Sayer, director of the Idaho Department of Commerce, is asking the Legislature to approve a program that he says will be a boon to attracting new businesses to Idaho.

The Idaho House Revenue and Taxation Committee has agreed to consider a bill that would create a new government incentives program to encourage business growth and job creation. The Tax Reimbursement Incentive (TRI) would be administered through the Idaho Department of Commerce and would add to the existing list of state government programs intended to attract new businesses and to encourage new job creation.

“What you have in front of you is a piece of legislation that literally can accelerate our economy into the 21st century,” Jeff Sayer, director of the commerce department told the committee. “The world is becoming very sophisticated. We get phone calls from sophisticated companies that have pre-selected us, but they are asking what we can bring to the table. The incentives we offer matter, and the world we live in is one where we have to have incentives on the table.”

Sayer also told the committee members that the TRI program is quite different from other business incentive programs from the state, noting that “one of our constitutional foundational philosophies is that we will not give money to private companies. So the only thing we offer funding to is infrastructure, but a lot of the companies looking at Idaho don’t need infrastructure help.”

IdahoReporter.com questioned Sayer after the committee hearing on his assertion that the only incentive that Idaho currently offers to businesses involves infrastructure assistance. What about the Workforce Development Fund, among others, that provide perks beyond the scope of infrastructure?

“We have used those in the recruiting packages, but they have been targeted at developing skill sets for the labor market,” Sayer acknowledged. “That was far beyond infrastructure. I guess I shouldn’t say that we only have infrastructure. I guess my point was that a large part of what we have has to go into infrastructure. We do have the Workforce Development Funds and those are focused on developing skill sets, where this incentive is a little bit more broad and a little more flexible.”

While Sayer did not offer extensive explanations of the TRI proposal, language within the bill states that it “is a new performance-based economic development tool that provides a tax credit up to 30 percent for up to 15 years on new corporate income tax, sales tax, and payroll taxes paid as a result of a new qualifying project.”

The bill also notes that “the tax credit percentage and project term would be negotiated based upon the quality of jobs created, regional economic impact, and return on investment for Idaho.”

Sayer alluded to the committee that the initiative would help bolster wages paid to private sector workers.

According to Rep. Dell Raybould, R-Rexburg, a member of the committee, the legislation would not increase the state’s minimum wage mandate. “It is not increasing the Idaho minimum wage law,” Raybould told IdahoReporter.com. “What it is asking is that a company that comes in pays a wage that exceeds the average of the wages paid in the respective county where they are moving to.”

Sayer said that the state will not incur any costs initiating the program, although he conceded that the program could mean that the state would forego up to $3 million in tax revenues during fiscal year 2015.

During questioning, Rep. Lenore Hardy Barrett, R-Challis, stated “somebody once said ‘Once burned, twice shy,’ and I probably fall into that category.” Barrett recalled several previous job creation programs that the state had implemented, lamenting the outcomes they had produced.

She then noted that the state of New York had recently proposed a 10-year, tax-free incentive to attract businesses to certain regions, and asked Sayer if his plan would make Idaho competitive nationally.

“This will definitely give Idaho a seat at the table,” he stated.

Rep. Janet Trujillo, R-Idaho Falls, commented “We have a lot more to offer than New York. Businesses going to New York may be tax free for 10 years, but then they’ll have a much higher rate to pay than they would in Idaho.”

Sayer also described his plan as a “merit based” incentive, and claimed that companies will “have to produce” before they get any benefit from the government.

Sayer told IdahoReporter.com that his new initiative is patterned after similar programs in Utah, Arizona, North Carolina and South Carolina.

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