The Idaho Legislature convenes January 9th. In advance of the session, we interviewed several legislative leaders and asked them about Idaho’s economy and what the state could be doing to boost growth and job creation.
Sen. Brent Hill (R-Rexburg) is Senate President Pro-Tem. Hill joined the Idaho legislature in 2001. His colleagues voted him President Pro Tempore at the start of the 2011 session. Here is our conversation:
Q: What could the state be doing to help with job creation?
A: Last year we passed the Hire One Act to incentivize employers to go out and hire employees, offering them some tax credits if they meet certain criteria. And we also had some tax exemptions and so forth to help stimulate the economy and job growth, particularly small businesses. We aren’t in the same situation as the federal government. Anything we give away in the form of tax incentives or tax breaks affect the bottom line immediately. We’re not allowed to go out and borrow money the way the federal government does. And so, we may be doing things that give us some growth in the long term, but could make us suffer more in the short term, and as you know we’ve already been suffering quite a bit. There are some ideas to possibly reduce tax rates over the long-haul, not doing it immediately, but as a phase in. By broadening the tax base, getting rid of some exemptions, credits and other things, and actually lowering the rates so that everyone benefits instead of the legislature picking and choosing who the winners are and who the losers are. I think that’s something that would be good for the whole, because it goes across the board in helping all tax payers, both individuals and corporations.
Q: The Hire One Act is set to expire in 2012, do you think the legislature will extend that?
A: I’m not sure the Hire One Act will go on. When we do credits or exemptions, just by a matter of policy, we try to put a sunset on them so they can be reviewed at a point in time and determine if they’re accomplishing what they were intended to accomplish. If the time is over that we need to do those. That’s why we have an expiration date on the Hire One Act. If we can determine its doing some good and that there may be some jobs created because of it and the private sector is using those savings in making greater investments in business, I think you’ll see it extended, not on a permanent basis but again on a temporary basis.
Q: What can the state do to get people back to work and create jobs?
A: Jobs, I think are a top priority for the state and the federal government. Unfortunately, the state has fewer resources in order to help create those jobs. The best thing we can do at the state is to provide a business friendly environment. And we do that by keeping a stable tax structure, that’s not going to be raised when things get bad and dropped when things get good. A tax structure that businesses can plan on, and keep our regulations to minimum, those regulations eat up a lot of profits and prevent them from expanding and creating more jobs. If we can create a business friendly environment in Idaho, which we already have, keeping our resource costs low, I think you’ll see many businesses expand in Idaho as the economy improves as well as other business coming from other states that are burdened down by heavy regulations, particularly.
Q: Are there specific tax credits or exemptions the state should phase out?
A: One of the big ones is the Idaho Investment Tax Credit, which is a credit given to businesses when they purchase equipment. And that can be used to offset to up to half of their tax liability. So, even though our corporate rate is 7.6 percent, many corporations are only paying 3.8 percent, because they’re only paying half of the rate because of the investment credit. If we lower the tax rate, for small businesses as well as corporations, I think you’ll see we’ll have to phase out the investment credit at the same time we lower the rate.
Q: What are your budget priorities?
A: We’ve set our priories and made them clear. Our first priority is to restore some of the cuts that went to public education. Education is an investment in the economic future as well as the future of our citizens. For the most part, our legislature is very committed to our public education system. It was the last to receive cuts, and it will probably be the first to see some restoration of those funds they’re losing out on. That doesn’t mean we’ll completely ignore everything else, and it doesn’t mean we’ll completely restore public education before we start looking at some other programs, because there are some other vital programs that have been hit pretty hard. But certainly, first priority is our public education system.
Q: What about Medicaid funding?
A: We had some significant cuts to Medicaid last year. Some of those were a matter of policy, some adult services particularly, that possibly the legislature will not restore. It’s hard to evaluate the mood of the legislature in that regard. Certainly, there are some services that are vital to the less fortunate and vulnerable in our society. And they too have experienced some cuts, although not as big in some other areas. We want to preserve that safety net, I don’t think it’s anyone’s intention to eliminate that. And we need to buoy it up a little bit more. When the federal government came in with the stimulus funds, they helped us more with Medicaid. When that help was withdrawn, we just couldn’t make it up all at once. I think we’ll see some restoration in that area, but probably not to the same extent as education.
Q: What, if anything, will the state do if unemployment insurance benefits aren’t extended?
A: I think the whole unemployment issue is a very touchy issue. As you know, last year we extended those unemployment benefits, it was not a unanimous decision. With director Madsen’s comments about not extend those benefits, I think it will be difficult to extend those in the upcoming legislature regardless of what the federal government does, unless the federal government is going to help pay more of the bill. Our unemployment fund is already in a deficit situation, we’ve already had to borrow money from the federal government to pay out the unemployment benefits we have so far. I think there’s a limit to what the legislature is probably willing to do as far as the debt they’ve got to incur to the federal government in order to extend those benefits much further.
Q: Do you think unemployment benefits should be extended?
A: Well, that’s a hard question to answer at this point, not knowing what the federal government is going to do. Again, the federal government is talking about picking up more of the tab and so forth. I think there are people who are truly looking for work, and it makes it a very difficult situation for them. However, I know of situations where people have turned down jobs because they can make more on unemployment. You hear those horror stories, and it scares lawmakers from time to time. But, again, unemployment has been a safety net, and has been extended far beyond what was originally intended and regardless of what I think, it will have a tough hall going through the legislature this year.