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News >  Idaho

Lawmakers may try to do more to boost jobs in rural Idaho

Idaho’s state Capitol glistens under snow and cold blue skies on Thursday in Boise. Inside, lawmakers heard from experts and business leaders on prospects for the state’s economy in the coming year. (Betsy Z. Russell)
Idaho’s state Capitol glistens under snow and cold blue skies on Thursday in Boise. Inside, lawmakers heard from experts and business leaders on prospects for the state’s economy in the coming year. (Betsy Z. Russell)

BOISE – Idaho lawmakers may consider expanding a jobs incentive that state officials say already is generating hundreds of new jobs in the state.

Sandpoint Sen. Shawn Keough says it could do more for small, rural areas like those in her North Idaho district.

The Tax Reimbursement Incentive, first created two and a half years ago, already has been awarded to 33 businesses, state Commerce Director Megan Ronk told lawmakers Thursday, and those projects are projected to create 5,200 new jobs and $960 million in capital investment.

Ronk estimated that the state will receive $257 million in new direct revenue as a result of the incentives issued thus far, while granting credits totaling $60 million. “So based on our analysis, we’re looking at about a 4-1 return on investment, which I think is something we’re pretty proud of,” she said.

The incentive provides a reimbursable tax credit for up to 30 percent of income, payroll and sales taxes for up to 15 years. Projects in urban areas must create at least 50 new jobs paying at or above the average county wage; in rural areas, they must create at least 20 such jobs.

“I think it’s a very valuable tool,” said Keough, a Republican and the co-chair of the Legislature’s joint budget committee. She also serves on the joint Economic Outlook and Revenue Assessment Committee, which held day-long hearings Thursday on Idaho’s economy in preparation for the legislative session starting next week. The panel will make an assessment of how much tax revenue the state’s economy is likely generate next year, to help guide deliberations on the state budget.

Keough said the incentive’s been “helpful in my district,” where two companies, Quest Aircraft and Kochava, a high-tech firm in Sandpoint, have received it. Kochava was awarded a 10-year, 28 percent tax break in 2014 to add 208 new jobs at an average salary of $59,000; Quest, also in Sandpoint, got a 12-year, 25 percent tax break to create 187 new jobs at an average salary of $39,500.

Ronk told The Spokesman-Review on Thursday afternoon that she and the Otter Administration plan to propose legislation in the upcoming session to create a new “micro” community category for the incentive, which would allow projects creating at least 10 high-paying jobs in communities with populations of 5,000 or less to qualify for the credit.

“One of the pieces of feedback we have received as we have traveled throughout the state over the past year is that the 20-job requirement for the rural community designation is still unattainable for Idaho’s smallest communities,” Ronk said.

Keough said she’s in favor of the idea, which could “bring business to Bonners Ferry, Idaho, or Priest River, Idaho,” along with other struggling small communities around the state.

“I’m excited for Idaho as a state – the Treasure Valley’s booming, Kootenai County, the Magic Valley,” Keough said. “Rural Idaho needs some help, serious help. We need to be helping these communities as well.”

Keough said she’s discussed the concept with Ronk, and agreed to carry the bill in the Senate.

The tax break has come in for heavy criticism from the Idaho Freedom Foundation, a free-market lobbying group, that contends it’s a form of “cronyism” that “creates winners and losers.” That criticism intensified when Paylocity, a national competitor of Employers Resource, an Idaho payroll processing and human resources company owned by big Freedom Foundation backer George Gersema, got the incentive for its plan to add 500 workers in Boise.

Wayne Hoffman, Freedom Foundation president, argued that the break will force the Idaho firm to pay its employees more to avoid losing them to Paylocity. “That’s a hidden tax that Idaho companies can’t afford,” he wrote on the group’s website. “Special tax gimmicks like this special tax break make for lousy tax policy.”

Lawmakers overwhelmingly approved the incentive in 2014, backing it 28-6 in the Senate and 61-7 in the House. Gov. Butch Otter signed it into law in April 2014.

Keough said what she likes about the incentive is that companies must actually keep their promises to create jobs and invest capital before they get anything from the state. “It demands participation instead of a giveaway,” she said. “I think that’s an honorable place to be.”

When former state Commerce Director Jeff Sayer first pitched the idea to lawmakers, he argued that the state wouldn’t give anything away – it would only refund a portion of new state revenues created in response to the incentive, which otherwise wouldn’t have materialized.

Ronk said as a result of the incentives awarded thus far, “We anticipate about $2.3 billion in new wages coming into the state.”

Said Keough, “We wouldn’t have any of that.”

The incentive awards so far have been divided almost equally between existing and new businesses in Idaho; 16 of the 33 involved existing Idaho businesses, and 18 of the 33 were in rural areas.

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