Committee kills governor’s tax incentive package

BOISE – A House committee killed a massive corporate tax incentive package, one of the keystones of Gov. Dirk Kempthorne’s agenda, by one vote Wednesday after lawmakers argued it wouldn’t benefit the whole state.

“We’re starting down a slippery slope if we pass this,” said Rep. Dennis Lake, R-Blackfoot, the vice chairman of the House Revenue and Taxation Committee. “This is particular legislation for particular people. The policy we set should be for everyone.”

Spearheaded by Lake and Rep. Jim Clark, R-Hayden Lake, the committee voted 10-9 to shoot down HB 216, which would have allowed companies that create at least 500 new jobs with $50,000 annual salaries plus benefits to receive millions of dollars in income, property and sales tax breaks.

“This is too large of a tax giveaway, especially with property taxes,” said Clark, who made the motion to kill the measure.

All four Democrats on the committee, including Rep. George Sayler of Coeur d’Alene, opposed the legislation. Rep. Nicole LeFavour, D-Boise, contended there was no guarantee a large business would stay if the state gave it all these incentives.

“I wish I could feel confident that this could be a fix,” LeFavour said. “Other states are luring these businesses away, too.”

Kempthorne, who unveiled the plan in his Jan. 10 State of the State address, saw it as a way to attract large, Fortune 500 companies to Idaho.

“Today’s vote simply defies logic,” Kempthorne said. “This legislation would create good-paying jobs. … I am concerned with the message sent by this handful of legislators. … Their vote limits our ability to attract new jobs to our state and defend our existing economic base.”

Kempthorne may try to bring back a new version of the bill, possibly as soon as this week.

Several lawmakers joined Lake and Clark in condemning the incentive package, arguing the bill was tailored for large, growing communities such as Boise but did little for rural communities.

Though the two-hour meeting centered only on HB 216, two other measures that would give scaled-down tax incentives to smaller companies were scheduled to be discussed next. One of those bills, which targeted smaller communities, was proposed by the governor.

The vote on HB 216 came after House Speaker Bruce Newcomb entered the packed meeting room to make a last-ditch plea to save the bill. He suggested the committee send it to the full House without a recommendation so it could be debated in more depth.

“This is a really, really important bill,” said Newcomb, R-Burley. “If this bill doesn’t pass, I know of at least one company that will leave, and that would affect 70 percent of our communities.”

After the hearing, when asked for the name of the company, Newcomb said: “It’s Albertsons – they’re going to Chicago.”

But John Reed, the vice president of corporate tax for the Boise-based grocery chain, told the committee the company had no plans to relocate.

Rep. Leon Smith, R-Twin Falls, said the bill was “special legislation that targets one company. It almost appears they helped draft the bill. We need tax policy favorable to all corporations.”

Reed and other business advocates, however, said the measure would be an economic boost to the whole state. “The more business a state can attract, the better off its residents will be – in jobs, in costs of goods, and in community services,” Reed said.

Rigby GOP Rep. JoAn Wood asked, “What about the property values for the little guy that skyrocket when these people come in? Where is the help for that person?”

Brian Whitlock, the governor’s chief of staff, told Wood that all Idahoans should have an opportunity to succeed. But to remain competitive, he said, the state has to offer incentives for big companies like almost every other state is doing.

“This is an incentive for long-term investment,” Whitlock said, adding that other states are “writing checks” to companies to relocate.