Lean Budget Doesn't Stop Idaho's TBED Agenda

Idaho Governor Dirk Kempthorne dedicated a portion of Monday's State of the State and Budget Address to describing how tight the 2005 fiscal environment would be for his state. The temporary sales tax will lapse, costing the state $170 million in foregone revenue. The one-time $83 million in federal bailout funds are depleted. State employees will get a 27th biweekly paycheck this calendar year, resulting in an additional budgetary burden of approximately $20 million.

That $273 million could represent 13 percent of the state's $2.083 billion budget. Add an $11 million expected increase in health insurance for state workers and the ever-escalating cost of Medicare, and the forecast is less than rosy.

As a result, the opportunity to let a couple of small tax credits expire quietly – tax credits affecting only a small portion of the governor's constituency and costing more than $2.5 million – might be appealing.

Instead, the governor singled out the Broadband Tax Credit and Research & Development Tax Credit in his speech to remind state legislators of the role the credits are playing to transform the state's economy:

"Our innovative Broadband tax credit for high-speed communications is a conduit allowing prosperity to flow to rural Idaho and Idaho products to flow to the world. We knew the potential, but we couldn’t quantify the outcome. Now we can. More than half the state has high-speed connections; but the job’s not finished and that tax credit is set to expire.

"It’s the same with our Research and Development Tax Credit. Has it been successful? Just ask Micron Technology, which brought manufacturing jobs and some of the latest technology home from overseas, including an incredible medical breakthrough — the 'camera-in-a-pill.' Ask AMI Semiconductor in Pocatello, a world leader in custom integrated circuits for everything from pacemakers to automotive brakes and security systems. Both companies have opened new multi-million dollar R&D facilities. But now that tax credit, too, is set to expire.

"So my recommendation tonight is to continue these incentives so that we can connect all of Idaho with the latest in high-speed communications and continue to promote research and development. I’m asking you to make these tax incentives permanent."

Both credits were among several recommendations from the Idaho Science and Technology Advisory Council [see the Jan 19, 2001, issue of the SSTI Weekly Digest]. Led by Dr. Billy Shipp, the Council was created in 1999 and is working to shape the policy and programs to build Idaho’s science and technology industries.

To emphasize the increased importance Gov. Kempthorne is placing on tech-based economic development during a time of tight fiscal constraints, he also used the State of the State Address to announce the creation of the Office of Science and Technology:

"You’ve seen the importance of science and technology to Idaho’s economy. I believe it now deserves full-time attention... Using existing resources and a new investment of $100,000, we will begin pushing an aggressive agenda to expand science and technology throughout the state.

"I’ve asked Karl Tueller, a veteran of the Department of Commerce, to head this new office. Karl is a strong leader and he has the experience and the passion to make this a successful endeavor..."

An additional measure to increase the effectiveness of Idaho's economic development efforts will be the merger of the state's Departments of Commerce and Labor. Gov. Kempthorne said in his speech, "Many times I’ve been in meetings with companies considering moving to Idaho. Even as the meetings ran into late nights and early mornings, the Directors of Commerce and Labor have been by my side. I believe that by merging these departments we can maximize our resources, eliminate redundant functions, while continuing to recruit and retain businesses and create jobs for hard working Idahoans."

The merger will require legislation to take full effect.

Gov. Dirk Kempthorne's State of the State and Budget Address is available at: http://www2.state.id.us/dfm/2004Idaho/Speech/2004SoS.htm