In my garage toolbox, I have a special tool that releases the spring that holds a set of automobile drum-brake shoes in place. If you've ever done a brake job, you know what a pain it is to do one without the right tools. I think I last used that tool in 1988 while in the Army at Fort Benning, Ga. to do a brake job on the 1971 Ford F100 that I had just bought for $700. Two decades later, the tool still sits in my toolbox just in case I need it again. This week, Idaho legislators started cleaning out Idaho's economic development tool box, and I have to wonder if they may be throwing away some important tools they may need again someday.

The two that concern me the most happen to be two of the few technology-oriented incentives the state provides.

Rep. Dennis Lake, R-Blackfoot, introduced three measures this week to eliminate the Corporate Headquarters Incentive Act and to eliminate tax credits for research and development and broadband equipment.

All three passed the House Revenue and Taxation Committee, which Lake chairs, on Wednesday. The House will likely vote soon, and then it's on to the Senate.

I really don't have a problem with the Corporate Headquarters Act. Despite the hype from then-Gov. Dirk Kempthorne when it passed in 2005, it was and remains a far too restrictive incentive. If you remember, it was pretty much written to encourage Albertsons to expand in Idaho. We all know how that worked out.

In the interest of full disclosure, I was working at Idaho Commerce & Labor at the time and was responsible for helping promote the act. We sent out national press releases and even pitched the act at a big event in San Jose, Calif., but we got no takers. Quietly, many of the economic development professionals told me there was no way they could sell it.

But why dump the tax breaks for research and development and broadband? Lake told me they have outlived their usefulness and represented a large amount of state revenue.

Eliminating the two breaks would add nearly $5 million to the general fund. But at what cost? We already have a tech community that thinks the state does little for the industry.

That aside, does it make sense to eliminate any incentives?

Allow me to borrow the expertise of Paul Hiller, executive director of the the Boise Valley Economic Partnership, to help answer this question.

Hiller, whom I must also thank for inspiring the toolbox analogy, says he doesn't like to see incentives eliminated because you never know when a company could come to Idaho looking for something specific and "it's no longer in your toolbox."

Hiller even suggested that the Corporate Headquarters Act should not be killed but revised to make it more attractive.

When I spoke to Hiller this week, he said his organization has seen a spike in interest from companies looking to relocate or expand in Idaho.

It's not all going to happen tomorrow, but he says companies are making long-term plans to expand after the country works through the current economic slowdown.

And Idaho still has a high national profile. We were second on the annual Forbes "Best Places for Business and Careers" ranking this week.

When companies start expanding again, Idaho needs to be ready, and that means having economic development tools that our economic development professionals can work with.

If the Legislature can make a case for dumping some current incentives, let's use that money for other incentives that might work better and not just dump the revenue back into the General Fund.

The last time I checked, there are some deserving candidates. I think the film incentive program working its way through the Legislature is short about $1 million, and I'm sure the folks at Idaho Tech Connect wouldn't object to having its $300,000 in funding restored.

By Ken Dey - kdey@idahostatesman.com
Edition Date: 03/21/08

Ken Dey is the high-technology reporter at the Idaho Statesman. Read his TechIdaho blog at IdahoStatesman.com. Reach him at 672-6757 or kdey@idahostatesman.