Major tax-incentive legislation for business expansions passed the Senate today and headed to the governor’s desk; HB 546, proposed by state Commerce Director Jeff Sayer, passed on a 29-6 vote. (Note: An hour later, the bill was held for reconsideration the next day; there's more here.) The bill would allow existing or new businesses that create certain numbers of new jobs, if those jobs pay at least the average annual wage in the county, to qualify for a refundable tax credit of up to 30 percent of their state corporate income taxes, payroll taxes and sales taxes for up to 15 years.
“They don’t get any tax credit until after they have already created the jobs,” said Sen. Jim Rice, R-Caldwell. “They start getting it when they perform.” The bill, dubbed the “Idaho Reimbursement Incentive Act,” is patterned after a Utah program, but has some key differences: The Utah law forbids retail businesses from applying; and requires wages to be 25 percent higher than the county’s average wage. Rice said the bill will bring jobs “that pay over minimum wage,” saying, “That’s what we need in this state. We have to keep our kids here.”
“Let’s give it a chance and see if it works,” said Sen. Chuck Winder, R-Boise. “Because I think it will generate some jobs and will generate some tax income.” Sen. Todd Lakey, R-Nampa, said it’s better to get “70 percent of a good thing” than 100 percent of nothing.
Opponents included Sen. Steve Vick, R-Dalton Gardens, who told the Senate the bill wouldn’t help small businesses. For companies to qualify for the credit, they’d have to create at least 20 jobs in a rural area – defined as an unincorporated area or a city with a population of 25,000 or less – or at least 50 jobs in an urban area. “Will this legislation lead to corporate welfare, crony capitalism, picking winners or losers? I don’t know, but it could,” Vick said.
Sen. Cliff Bayer, R-Boise, said he worried that the bill would create a situation where two comparable Idaho businesses are paying very different amounts of taxes, because one got the credit and one didn’t. “That concerns me – that’s not equitable,” he said. “I think it can create some disparities.”
Senate President Pro-Tem Brent Hill, R-Rexburg, noted that the bill requires extensive reporting back to the Legislature and the public about who gets the credits, how many jobs are created, and more. “I’ve voted against job credit bills, I’ve voted against a lot of things,” Hill said. “This is the best I’ve seen.”
The measure earlier passed the House on a 63-5 vote; it has a whopping 47 legislative co-sponsors, including eight Democrats and 39 Republicans. The Idaho Legislature has 105 members.