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Otter and Luna get it; let's hope the other Land Board members will, too

Otter and Luna get it; let's hope the other Land Board members will, too

Wayne Hoffman
July 9, 2011
Wayne Hoffman
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July 9, 2011

It's good to see two of our elected officials commenting on and disavowing a controversial action they took last year that gave the state ownership of a private business in direct competition with the private sector. Asked recently by IdahoReporter.com whether the state should have purchased Affordable Storage in Boise, Gov. Butch Otter second-guessed the vote he made almost a year ago to do so and said "no." Superintendent of Public Instruction Tom Luna agrees his own affirmative vote was incorrect. Kudos to them.

The five-member Land Board purchased Affordable Storage for $2.7 million. At the time, the board said the purchase would fulfill the constitution's requirement that the state maximize the return on its land investments. Defenders of free market capitalism correctly asserted that the state government would be competing against the private sector, and the private sector would be at an obvious disadvantage.

"I think that was a mistake," Otter, the Land Board chairman, now says. "But, I'm the first to admit it. I sat right there and asked a bunch of questions about it. And, it's not a mistake we're ever likely to make again."

Luna agrees and said he wants to figure out a way to unload Affordable Storage from the state's portfolio. Meanwhile Land Board member Lawrence Wasden, the state's attorney general, told the Idaho Business Review, "I don't think it was a mistake. (Affordable Storage) fits all the criteria" of what they want in the state's asset portfolio. State Controller Donna Jones gave a mixed answer , saying, "I’m not at all comfortable with government being in competition with private enterprise. However, Idaho law and our Constitution require the board to act with undivided loyalty and to generate the maximum return possible for the endowment beneficiaries. "

Secretary of State Ben Ysursa has yet to comment on the issue.

I think Jones and Wasden are misreading the constitutional mandate. If their ideas were carried out their logical conclusion, the state government would have an obligation to look for Idaho's top-performing companies, store fronts and hotdog carts and buy every last one of them. I also think proponents of this government investment overstate the enormity of Affordable Storage's success. We don't know, and probably never will know, which storage businesses failed to expand, failed to hire new employees or laid some off, failed to give raises or make new investments as a result of the government's tinkering in the marketplace.

A bill was introduced in the last legislative session to block the state government from again entering into competition with the private sector. Reps. Grant Burgoyne and John Vander Woude wisely championed the proposal and continue to support efforts to block further investments in new commercial enterprises.

In 1960, the Idaho Supreme Court rendered a ruling that noted the disparity between private- and government-run business.

"If the state-favored industries were successfully managed, private enterprise would of necessity be forced out, and the state, through its municipalities, would increasingly become involved in promoting, sponsoring, regulating and controlling private business, and our free private enterprise economy would be replaced by socialism," the court wrote. "The constitutions of both state and nation were founded upon a capitalistic private enterprise economy and were designed to protect and foster private property and private initiative."

Otter and Luna get it. Let's hope the rest of the Land Board will, too.

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