Idaho to refinance jobless debt to feds, saving employers $167M
HB 108 passed the Senate unanimously and the House with just four no votes. It will let the state refinance its $202.4 million debt to the federal government for unemployment benefits that exceeded the state’s funds since June of 2009. The bonds will carry an interest rate of just under 3 percent; without the bill, Idaho would have to pay 4.1 percent interest to the federal government on the debt, so there’s $10 million in interest savings.
Plus, without the bill, Idaho employers would have lost a federal tax credit worth $157 million over the next three years – a credit that goes away if Idaho’s unemployment fund debt to the feds isn’t paid in full by September. With the bonding plan, it will be.
“I think it’s win-win,” said Roger Madsen, director of the Idaho Department of Labor.
HB 108, though low-profile in this year’s legislative session of big battles over budget cuts, likely could have the biggest impact on Idaho businesses of any bill enacted. Here are some of the other significant bills for Idaho businesses this year:
Tax credit for hiring
The House passed a refundable tax credit for new jobs sponsored by the Idaho Chamber Alliance, but it was killed in a Senate committee amid concerns over its fiscal impact – listed simply as “unknown” – and fears that the measure would reward employers who laid off workers during the recession and now are beginning to hire them back, rather than those who kept their employees working.
A new bill now has been introduced, at the urging of Gov. Butch Otter, to provide a sliding-scale tax credit for employers adding new workers, with those who’ve made less use of the state’s unemployment insurance system in the recession getting a higher credit.
“What we are trying to do with this piece of legislation is show our confidence in our economy,” said Otter aide Mark Warbis. The sliding scale, which varies from 2 percent to 6 percent of the new employee’s gross wages, is “for those employers that have been good corporate citizens during the recession,” Warbis said, “and actually made a priority of keeping employees on the job.”
Those who’ve paid in more to the unemployment insurance system than their laid-off employees have drawn out would get the 6 percent credit; those with average ratings on that get 4 percent; and those with negative ratings get 2 percent.
The bill allows jobs paying $12 an hour and providing benefits to qualify for the credit in counties with more than 10 percent unemployment, and $15 an hour in counties with less.
The new bill still must pass both houses of the Legislature.
Other key legislation
• Idaho’s Workforce Development Training Fund was extended through 2017 by legislation passed this year. HB 79 passed both houses and was signed into law by Otter on March 15. Madsen said that’s “a big one for Idaho businesses.”
• HB 109 continues Idaho’s eligibility for extended federal unemployment benefits; without the bill, a technical change in federal law would have made the 17,000 unemployed Idaho workers now receiving the extended benefits ineligible by the end of 2011. Though a minority of lawmakers tried to kill HB 109 to send a message to Congress about federal spending, the bill passed both houses and awaits the governor’s signature.
• HB 285, issuing $162 million in highway bonds in the next year to complete a multi-year bonding project, passed the House on a 42-28 vote, and now appears likely to pass the Senate and become law. The bonding plan covers two highway projects: Highway 95 between Garwood and Sagle in North Idaho, and state Highway 16 from I-84 to State Highway 44 in the Treasure Valley; both projects already are fully planned, and the money is for construction.
“Those are jobs,” said Rep. Marv Hagedorn, R-Meridian. “This is about the economic engines of this state.”