BOISE – Idaho’s lackluster tax incentives make it flyover country for many companies looking to relocate or expand. That’s the verdict of Department of Commerce Director Jeff Sayer, the state’s top economic development promoter, who pitched a plan Friday he believes would help change that.
The measure, modeled after one in Utah and supported by Gov. Butch Otter, is Sayer’s “highest priority” for the 2014 Legislature, he told the House Revenue and Taxation Committee.
His proposition is this: What if Idaho allows companies that hire new, well-paid employees to recoup up to 30 percent of their income, sales and payroll taxes after they’ve proven to have met expansion promises? That way, Sayer says, the state would protect itself from companies that don’t follow through by declining to distribute the money.
“We literally will be putting the responsibility on the shoulders of the companies to determine their own success,” Sayer said. “We feel like we will be out in front and competitive.”
The House tax panel introduced the measure for debate in coming weeks.
According to the proposal, companies would have to create jobs and pay income, sales and payroll taxes before ever getting a penny back from Idaho’s government.
Beforehand, they’d work with the Department of Commerce, as well as the seven-member Idaho Economic Advisory Council, to negotiate the level of tax credit, ranging from 1 percent to 30 percent. They’d also hash out the duration of the deal – up to 15 years – along with the terms to be met to earn the tax credit.
Companies in rural areas would have to create at least 20 new jobs, while companies in urban areas would have to create 50 jobs, all of which pay more than the average in the county where those jobs are located.
Another provision requires local communities to support the projects by offering a match.
That’s something Commerce spokeswoman Megan Ronk said could range from helping dig a ditch for utilities, if that’s all a community has to offer, to more significant monetary help for projects in more urban areas.
“There’s a whole range of matches that could be eligible,” Ronk said.
This “Tax Reimbursement Incentive” is similar to a 5-year-old program from Utah.
There, the incentive has been credited with helping lure companies including a German prosthetics maker, Ottobock HealthCare, to create 80 jobs in the state around Salt Lake City.
Sayer, a former Utah resident, says he doesn’t mind cribbing from Idaho’s southerly neighbor if it helps create jobs. “They’ve proven it works,” he said.
His proposal includes some differences from Utah’s program, however.
For instance, when that state’s Legislature created the program in 2009, it excluded retail companies. Idaho, by contrast, will hold out this tax carrot to retail stores.
Sayer says he’s optimistic the plan will prevent companies that churn out low-paying jobs from getting the benefit.
“At the end of the day, we wanted this to be open,” Sayer said. “By having those minimum requirements built into the bill, it’s going to be self-selecting.”