A plan to give more tax breaks to companies expanding operations or setting up shop in small counties is dead for the year.
The Senate Local Government and Taxation Committee killed the plan on a 5 to 4 vote Tuesday.
The plan, written and sponsored by the Idaho Department of Commerce, would have dropped the threshold for waiving property taxes for some companies. That bar, now $3 million, would have dropped to $500,000.
The bill also would have opened exemptions to all non-retail companies, whereas state code now only offers the handout for manufacturing companies.
County commissioners have sole discretion to decide who wins tax breaks. Law allows commissioners to waive taxes for up to five years and up to 100 percent.
Proponents, including Pocatello Mayor Brian Blad, said the lower threshold would give smaller counties, which typically see smaller capital investments by companies, to draw more jobs to Idaho.
Opponents, including Rep. Tom Loertscher, R-Iona, worried the bill would shift tax burdens on to existing businesses and Idaho’s families.
Loertscher, who voted for the bill in the House floor hearing, regrets his action there. “In reflecting over my vote, I wish I could take it back,” he said.
“This is not good policy,” Loertscher said.
Idaho Freedom Foundation President Wayne Hoffman opposed the bill, urging senators to think about the unfair nature of some businesses getting tax breaks while others don’t.
“It’s all a matter of fairness,” Hoffman said.
He also said that while local control matters, “It’s awfully hard to vote people out when they’re the ones dispensing the special favors to the people receiving those favors.”
Commerce director Jeff Sayer said the measure gives more tools to small counties to aid start-ups and tiny companies.
“This helps the little guys,” Sayer said.
Sen. Jim Guthrie, R-McCammon, said the plan was too far-reaching for comfort.
“It seems like a big leap in one jump,” Guthrie said.
Guthrie also worried about the secretive nature of the idea. “I’d like to see a public hearing be held,” he said, adding that the whole thing is more clandestine than he’d like it to be.
Sayer said officials already work in the public sphere when considering incentives. “Going to a public hearing would be redundant to what’s already happening,” Sayer said.
Sen. Jim Rice, R-Caldwell, said he’s concerned about county commissioners deciding tax breaks without direct public oversight.
“I’d be more comfortable if this provided for a public hearing,” Rice said. “My real concern is counties waiving the taxes of other entities without a public hearing.”
Sen. Cliff Bayer, R-Boise, expressed concerns about competing businesses carrying vastly different tax burdens.
“I don’t quite subscribe to that,” Bayer said.
Note: The Idaho Freedom Foundation publishes IdahoReporter.com.