Commerce director tells lawmakers not to cut taxes

Legislators serving on a bipartisan tax working group received a bit of a surprise message Tuesday from outgoing Department of Commerce Director Jeff Sayer: Don’t lower taxes right now.

Legislative tax working group — Sen. Jeff Siddoway, center, and Rep. Gary Collins, right, discuss tax policy during Tuesday’s meeting of a tax working group at the Statehouse.

Sayer, a Gov. Butch Otter appointee who is resigning at the end of the year, instead urged lawmakers to invest in work force development, infrastructure and education to lure job-creating businesses and industry.

“We do need to lower taxes some day, and not today,” Sayer said. “What we are seeing is the return for the state is not in lowering taxes, it is investing in talent.”

Sayer prefaced his remarks to the committee by saying that four years ago he would have supported immediate tax cuts. But after interacting with business and industry leaders and studying economic development trends, Sayer said he has changed his priorities.

He urged lawmakers on the tax working group to “be bold.” He also said a “war” for talent is playing out across the country, with business leaders choosing where to locate and where to expand based primarily on the talent and readiness of the local work force.

Sayer praised Idaho Division of Professional-Technical Education Director Dwight Johnson and offered an example of a potential investment. He suggested investing additional state funds in professional-technical programs that simultaneously have high job-placement rates and lines of applicants waiting to get in.

If successful programs were bolstered, Sayer argued, students would fill unmet positions and earn living wages after earning a certificate in one or two years.

“My point is simply this: In all those conversations with industry leaders, not one of them has brought up tax rates,” Sayer said.

During Tuesday’s meeting, principal legislative budget and policy analyst Keith Bybee said Idaho’s tax burden ranks 11th lowest in the country, based on percentage of personal income taxed.

Sayer’s remarks came less than two weeks after legislators attending a Treasure Valley chambers of commerce forum suggested the House and Senate have the political will to pass corporate and individual income tax cuts. His advice drew a mixed reaction.

“I don’t necessarily know that that is exactly the way we want to go,” said House Revenue and Taxation Committee Chairman Gary Collins, R-Nampa. “I think tax competitiveness has a lot to do with what attracts people, but we need to look at the (work force needs) as well.”

Sen. Jim Guthrie, R-McMammon, supported Sayer, saying bolstering a work force pipeline to support business and industry “is the low-hanging fruit” that the Legislature should address immediately.

But Guthrie also urged the group to be exhaustive in considering Idaho’s options and reviewing all aspects of the tax code before issuing a report to the Legislature.

“We are 12 (lawmakers),” Guthrie said. “Out there is 105, so there’s going to be a lot of ideas.”

Rep. Dell Raybould, R-Rexburg, asked fellow lawmakers to consider whether there are any changes needed at this time to Idaho’s tax code and policy.

“I hate to go out to the shop and start repairing a piece of equipment if there is nothing wrong with it,” he said.

Senate Local Government and Taxation Committee Chairman Jeff Siddoway, R-Terreton, said legislative leaders put the group together to research tax issues and develop priorities. Their goal, he said, is to prevent the end of the legislative session from becoming “a bit of a train wreck when it comes to tax policy.”

The group is scheduled to meet again on Oct. 14, then again in early November.

Members of the group, which is not an official legislative committee, include: