Idaho biz owner Gersema: ‘Where does the corporate welfare end?”

Idaho biz owner Gersema: ‘Where does the corporate welfare end?”

by
Dustin Hurst
July 8, 2016
Dustin Hurst
Author Image
July 8, 2016

Idaho business owner George Gersema has had enough of the Idaho government’s love of handouts and corporate welfare.

“Where does the corporate welfare end?” Gersema asked Thursday during a phone call with IdahoReporter.com.

Gersema, who in 1985 founded the human resources company Employers Resource, has every right to feel upset. The Idaho Department of Labor announced this week it will give a competitor, Paylocity, more than $1.2 million over the next 16 months to train up to 500 workers.

The state agency will pay out the training cash from the controversial Workforce Training Fund. That money, at least a portion of it, comes right from Gersema’s own pocket. The Department of Labor fills the training fund with a portion of the unemployment-insurance taxes paid by businesses each year.

That bothers Gersema. He points out, “My tax dollars are being used to to pay for training my competitor’s employees.”

“Hell, what’s next?” he asked, wondering if Idaho could find another avenue to subsidize his competitor. “[Is the state] going to add a little profit to their bottom line?”

Even if this were an isolated incident, one could understand Gersema’s anger. But it’s not an isolated incident.

To draw Paylocity to Idaho, Gov. Butch Otter’s administration gave the company, which calls Illinois home, a $6.5 million tax break on income, sales and payroll taxes through the next 15 years.

Months after the state finalized that deal, Gersema filed suit, alleging the scheme is unconstitutional. He will appear in court on July 20 to establish his standing in the case.

Department of Labor Deputy Director Georgia Smith defended the deal’s fairness Wednesday, noting Employers Resource can apply for funding if the company needs help training or re-training workers.

Gersema rebuffed Smith’s defense. “Everyone can stick their nose in the public trough,” he said. “The point is that there shouldn’t be a public trough.”

He was also critical of the fund’s performance. A 2012 Idaho Department of Labor report deemed a mere 40 percent of training deals “effective.” The agency deemed the rest of the deals as either “ineffective” or said data were inconclusive.

That report eventually prompted Otter and Labor Director Ken Edmunds to announce tighter program controls and oversight. Though Gersema appreciated the effort, he wants proof that reforms have led to greater program performance.

“Where is the data to show this government program is any better than what it replaced?” he wondered. “Show me the data before you start handing out the training deals.”

Paylocity’s contract gives the company until November 2017 to train up to 500 workers at an average cost of $2,400 each. Paylocity can spend up to $4,800 to train individual employees, but they must hit the $2,400 average for all workers to remain in good standing.

Gersema is not a lone voice criticizing the training fund. In a March 2016 column, Idaho Freedom Foundation President Wayne Hoffman encouraged lawmakers to end the program.

The program is often described as a tool to keep businesses operating and to help meet industry workforce training goals,” Hoffman wrote. “In reality, it’s simply a government-giveaway to lucky companies that are mostly big businesses.”

Correction: IdahoReporter.com originally reported Paylocity will received the break on sales, income and payroll taxes for the next five years. The body has been updated to reflect that Paylocity's handout is actually 15 years long. 

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