The House Resources and Conservation Committee approved a measure Wednesday to prevent the state endowment fund from purchasing and running businesses.
The legislation passed on a 15-1 vote. Only committee chair Bert Stevenson, R-Rupert, voted against the bill.
The legislation wouldn’t prevent the state from owning properties, but it would stop officials from buying and running businesses. Under the plan, the state could still own commercial properties, including the several office buildings it holds in downtown Boise.
The state endowment fund, administered by the Idaho Department of Lands (IDL), holds only one business, a commercial storage facility it purchased for $2.7 million in 2010. The legislation would mandate the state to sell the storage facility within a specified period of time.
One of the bill’s co-sponsors, Rep. John Vander Woude, R-Nampa, said it’s improper for government to compete with the private sector. “To me, it goes to philosophy,” Vander Woude said. “Should the Idaho state government be in competition with free enterprise?”
Additionally, he noted, participation in business endeavors involves some amount of risk, meaning the state could lose money used to help fund schools and other government programs. “Do we want to take that risk with endowment fund money?” he asked.
Rep. Grant Burgoyne, D-Boise, also pushed that line of reasoning, saying the state might not have the expertise to run businesses, which could lead to substantial investment losses. “Is this something we should be doing?” Burgoyne queried. “Should we be unleveling the playing field now? My answer to that is no.”
Former state lawmaker Bob Forrey told the panel that the storage facility purchase is a first step down a road Idaho shouldn’t travel. “They’re going into business big time,” Forrey said of endowment fund managers. “That’s their plan.”
Boise resident Rachel Gilbert called state ownership of private businesses “socialism” and unacceptable. “I am concerned that’s the direction we’re headed,” Gilbert said. “It concerns me and it upsets me.”
IDL director Tom Schultz didn’t take a position on the bill, but noted that his agency’s investment activities reduce tax burdens for state residents. “Our motives are pure,” Schultz said. “Our motive is to generate revenue to support education and defray taxes in the state.”
Investment returns for the storage facility have been around 8 percent, one of the highest rates of the state’s holdings “Should we be doing that?” Schultz asked after pointing out the high returns. “That’s a decision for you to make.”