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Otter promises more use of troubled workforce subsidy program

Otter promises more use of troubled workforce subsidy program

Dustin Hurst
January 15, 2014
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January 15, 2014
[post_thumbnail]Rep, Lawerence Denney, R-Midvale, says the state should not put itself "in the business of helping one business over another.”

Gov. Butch. Otter promised this year that the state will ramp up its efforts to draw businesses to Idaho using subsidy programs, the announcement coming after some lawmakers called for a review of how the state hands out dollars to corporations.

In his State of the State address last week, he promoted the Workforce Development Fund, a pot of money that the state doles out to businesses that want to train or retrain their workers, as an effective tool for drawing new jobs to the Gem State.

Due to some significant deals that fell through and the loss of hundreds of thousands of taxpayer dollars, the fund has drawn the ire of some state lawmakers, notably Sens. Cliff Bayer and Chuck Winder, both Republicans from Ada County.

Bayer and Winder, and a handful of other legislators, want a thorough review of the program, but perhaps the only thing they may get this year is more handouts to businesses, as promised by the governor.

“You can expect to see more targeted use of grants for training employees not just for individual businesses, but for the market-driven growth of industry sectors that add value to Idaho’s economy,” Otter said in the budget address.

While the fund boasts a number of successful partnerships with the private sector, it also holds a few failures. At least 13 companies that signed on to the fund—and received millions of dollars from the state—are either out of business of shuttering their operations.

Most recently, a Heinz facility and a solar panel manufacturing plant, both in eastern Idaho, are examples of the program’s failures.

According to a 2012 report, the state has given more than $5 million since 1996 to companies that have either gone out of businesses or no longer operate in Idaho. The program has spent at least $62 million since its 1996 inception.

The Idaho Department of Labor crafted a report showing the program had an effectiveness rate of just 40 percent.

State Rep. Steve Hartgen, R-Twin Falls, generally supports the program, but says occasional review isn’t a bad thing. Hartgen, who chairs the House Commerce and Human Resources Committee, said maybe the state would benefit by picking more stable industries in which to invest.

“You know, something as basic as food processing, which is a very important industry in southern Idaho, seems to me has worked pretty well,” Hartgen said.

But the food industry is far from stable, as the H.J. Heinz plant closure in Pocatello demonstrates. The company decided, after receiving $880,000 in worker training subsidies, to close its Pocatello plant and shift operations elsewhere, costing the region 400 jobs.

Should taxpayers expect a perfect success rate for the program? Maybe not, the lawmaker told IdahoReporter.com

“I think you’re going to get failures and successes,” Hartgen said, noting that a few Magic Valley deals, including Chobani, Clif Bar and Frulact, have been successful. “It seems to me that if you’re going to have workforce development planning, that means not every one of them is going to be as successful as others.”

Rep. Lawerence Denney, R-Midvale, looks at the issue differently, noting that the taxpayer-backed subsidies give companies a leg up on the competition. “I don’t think we should be in the business of helping one business over another,” he said.

But Denney added that he believes encouraging companies to expand “is a legitimate function of the state.”

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