The Idaho Department of Commerce will ask legislators to add a project category to the state’s Tax Reimbursement Incentive program so the program can better accommodate small businesses in 2017.
A TRI is a tax credit available to moving or expanding businesses. The credit can be worth up to 30 percent of a company’s income, payroll and sales taxes for as long as 15 years.
The Department of Commerce uses the tax reimbursement program to encourage businesses to expand in or move to Idaho. It has drawn criticism from some small business owners who feel the program could be used to entice large competitors to enter the state while not doing enough to help local organizations that can’t produce big enough expansion projects to qualify for the incentive.
To qualify for a TRI, a business has to create a certain number of jobs that pay above the average wage in the county where the business is located. A business has to create 50 new jobs in an urban area or 20 new jobs in a rural area.
Megan Ronk, director of the Idaho Department of Commerce, will ask the Legislature to create a micro-community classification for cities that have less than 5,000 residents. The new classification would only require an expanding business to create 10 new jobs to qualify for the TRI in these communities.
“We want to create a third tier because some companies have been having a hard time meeting the 20 job requirement,” Ronk said. “The governor has approved moving forward with this so now we will be meeting with legislators.”
George Gersema, CEO of the Boise-based human resource company Employers Resource, sued the Department of Commerce in March, stating that a TRI awarded to Illinois-based Paylocity for building a Boise office hurt his business. A judge dismissed Gersema’s lawsuit in August, saying Employers Resource wasn’t directly harmed by the TRI program.
Gersema wants to see more programs that help existing small businesses, and he’d like the state to cut programs that only help large companies in order to create an even playing field. He said the micro-community designation isn’t enough.
“Obviously they are trying to fix a flawed piece of legislation,” Gersema said. “I have said from the beginning that this program favored large, out-of-state businesses so I’m glad they heard that. But this still doesn’t do anything for small businesses in Meridian, Boise, Idaho Falls or any of the other cities.”
Of the 31 projects that have been awarded TRIs since the program began in 2015, five have been in cities with fewer than 5,000 residents. Businesses building in Ketchum have received four TRIs and the cheese company Glanbia received a TRI to build in Gooding in 2015.