Lawmakers advance plan to jumpstart economy
BOISE - Gov. Butch Otter's three-year plan to jumpstart the economy by giving businesses tax incentives to create new jobs is headed to the Idaho House for debate.
The House Revenue and Taxation Committee advanced the bill Monday, hoping to make a dent in Idaho's pool of some 74,000 unemployed workers. The legislation now goes to the Idaho Senate, where a previous effort to spur job growth with tax incentives died earlier this month over concerns about its fiscal impact.
Otter's office unveiled the bill aimed at stimulating the economy last week.
"What we are trying to do with this piece of legislation is show our confidence in our economy and our confidence in our employees, in hopes that it will encourage them to show confidence in Idaho's economy," said Otter spokesman Mark Warbis.
The measure would give businesses a series of tax credits, ranging from 2 percent to 6 percent of a new employee's gross annual wage. The company's credit would depend on its rating from the Idaho Department of Labor for its unemployment insurance tax payments.
That means businesses that have paid more into Idaho's unemployment trust fund than their jobless workers have claimed would get the biggest tax credit. More than 75 percent of Idaho businesses fall into this category and hold a "positive" rating from the state Department of Labor.
The legislation will allow Idaho to reward employers who have kept unemployment down within their companies despite the economic downturn, said Dennis Lake, a Blackfoot Republican who chairs the House Revenue and Taxation Committee.
"For those companies that have done a good job, this is an attempt to say to them: 'OK, you've hung in with us through tough times, now if you'll add a job we'll give you a 6 percent credit,'" Lake said. "And for those who have had lots of layoffs and they're trying to get started again, we'll help you, but we're only going to help you with 2 percent."
The legislation would be retroactive to Jan. 1 and expire December 2013.
Supporters say it aims to help areas of the state hit hardest by the recession, with minimum wage requirements lowered for businesses in counties with the highest unemployment.
For example, companies would have to hire new people earning at least $15 an hour to receive the credit in counties where the unemployment rate is less than 10 percent. But companies in the 18 Idaho counties with unemployment rates of 10 percent or greater would have to create $12-an-hour jobs to qualify.
While some lawmakers lauded the provision, Republican Rep. Dick Harwood said he feared it could result in potential litigation.
"You're not treating the whole state equally and I'm not sure how that plays out," said Harwood, R-St. Maries.
Warbis countered that the legislation aims to lower the eligibility threshold for businesses in economically devastated areas of the state.
"This is not a matter of taxing them at a higher rate or a different rate," Warbis said. "This is the amount of the refundable tax credit they would get on the back end of it. It's not unconstitutional, illegal, immoral or backwards."
The previous measure would have allowed employers to receive a portion of their new employee's income taxes in the form of a 4 percent refundable tax credit of a new employee's gross wage. To receive the credit, companies would have to hire new people earning at least $12 an hour with benefits.
The new bill has won favor with the National Federation of Independent Business, which represents 4,000 members in Idaho.
"Although this bill is a tad complicated, we're hoping that the Department of Labor and others will perhaps be helpful in helping employers figure out what area they're in and how they're rated," said lobbyist Suzanne Budge.