BOISE – Major tax-incentive legislation for business expansions handily passed the Idaho Senate on Monday, but was pulled back for another look after the Idaho attorney general raised questions about its constitutionality.
The Senate will consider the bill again today.
House Bill 546, proposed by state Commerce Director Jeff Sayer, would allow existing or new businesses that create certain numbers of new jobs in Idaho 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. It would apply only to new jobs that pay at least the average annual wage of the county where they’re located.
“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 excludes retail businesses 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 the bill could create a situation where two comparable Idaho businesses are paying 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 and how many jobs are created.
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.
The Senate vote was 29-6, but that was before the arrival of the attorney general’s opinion, which suggested problems with the bill’s delegation of authority to the state Commerce Department to decide which taxpayers should get the credit and which shouldn’t. Idaho lawmakers are pushing to end their session this week, meaning any move to amend the bill would have to happen in a hurry.