Writings and observations

The challenge

It’s gotten a good deal of attention in Idaho, some in Washington and a little in Oregon. But from any of those angles, Idaho Governor C.L. “Butch” Otter‘s “Love Letter to Our Neighbors” merits a little thought.

The core of it is business solicitation, specifically going after businesses in Oregon and Washington which are seeing their states raise taxes, while Idaho is not: “We now are reaching out to hundreds of Oregon businesses, and will do the same with those in Washington if the legislature there follows Oregon’s lead. We aren’t offering many bells and whistles, but what we can offer is a business-friendly State government, a highly qualified and motivated work force, and communities where people understand that while government cannot be the solution to their problems it can and must be a champion for their own solutions.”

On Monday, Otter wrote that “Last month, for example, Oregon voters approved their legislature’s decision to raise taxes on the wealthy and on many businesses by $727 million. The immediate result was that my phone started ringing – and so did phones over at our Department of Commerce. It seems that word has spread about our Project 60 initiative, and that we are open for business, including theirs! The businesses that have called are emotional about this subject, and they have every right to be. Rising costs – especially during a recession – could put some employers out of business, or at least prompt layoffs. More than 2,000 Oregonians joined a Facebook group to protest the tax increase and commiserate about the repercussions. No less an Oregon business icon than Nike’s Phil Knight calls it ‘Oregon’s Assisted Suicide Law II’.”

On Tuesday, Washington Governor Chris Gregoire fired back. She said that “I’m not an expert on Idaho,” but pointed out “It looks like they have a corporate tax of 7.6 percent, a sales tax of 6 percent, an income tax ranging from 1.6 to 7.8 percent,” she said. Washington doesn’t have an income tax (though it has a comparable business and occupation tax), and its sales tax isn’t a lot higher. She mentioned (as she often does) the Forbes business rankings of states: “We’re now the second best state in the country and they went from seventh to 11th. They’re going down in the rankings. Regulatory environment we’re ranked 5th, they’re ranked 35th. You get my point?”

(Otter’s letter refers to studies ranking Idaho lower in tax rates than the others. Note to all: If you want to go state tax-survey shopping, you’ll find you can get whatever ratings you want if you look hard enough.)

Oregon’s officials by and large haven’t expressed terrific concern over this, though House Republican leader Bruce Hanna of Roseburg (who opposed the tax measures) did say in an Oregonian opinion piece today that “As a business owner, I recently received a letter from Idaho Gov. Butch Otter inviting me to bring my company and my jobs to his state. Although I have no intention of leaving Oregon, I’m deeply concerned when other states and cities are actively courting our businesses.”

A whole lot of posturing going on. But is any of this likely to make much difference in terms of business opens, closes or moves?

Not likely.

Comes down to a point the Idaho Statesman‘s Kevin Richert made in a blog post about the subject: “Otter’s pitch — and Gregoire’s public response the next day — is largely about tax rates. Not much talk about schools or public safety or parks. Do businesses only want to talk taxes?”

A few very ideological business owners may, but most – those more broadly concerned about their businesses and their future – have a wider range of concerns. What’s the marketplace for what I sell or provide? Are the people and materials I need readily obtained? What are the overall costs – not just the taxes, but the cost of utilities, land, and the costs of dealing with other people and businesses? What is the infrastructure like: What about those roads, schools, public safety agencies, health care? Is the community overall prosperous and stable – do people want to live there? And so on. (For that matter, what would be the cost of uprooting and moving to another state? How many years of tax breaks would be needed to pay that back?) Taxes are a concern, but for most business people just one of many.

Idaho’ legislature (along with its governor) is making the decision to cut, substantially, in areas of education, health care, public safety (in its broad sense), lands, infrastructure including but not limited to roads, environmental cleanup, culture (with proposals for cuts in public television and human rights oversight among other considerations) and beyond. The tradeoff is that small, incremental tax increases – which is what those passed in Oregon and under consideration in Washington are – are bypassed.

As for assets other than an argument for lower taxes, Otter’s comments were limited to a quick reference to quality of life but also acknowledging, “We aren’t offering many bells and whistles.” Really, that sounds like quite a give-up: If you’re looking for advantages here other than on taxes, well, let’s talk about taxes.

We’ve seen no indications yet of any big shift of businesses from any of these states to another (occasional moves happen all the time in the normal course of things), and we don’t expect any. There wouldn’t be a lot of business sense to it.

Although. If there’s a bet to be made here, we’d put our markers on Washington and Oregon.

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One Comment

  1. fortboise said:

    What, you’re saying Butch is all hat and no cattle? We’re shocked, shocked.

    Just as with state tax-survey results shopping, it’s easy to make a self-serving choice of dimensions to show how “business friendly” we are.

    Economically, geographically, politically, you name it, Idaho is simply not in the same league as the big states that make up the Pacific Northwest. We do try harder in some respects, though. We did a heck of a job making a home for CAFOs who wanted to escape California’s regulations, for example. In Idaho, manure management rises to the status of state secret.

    Seems rather fitting, n’est-ce pas?

    When I moved to Boise to work for Hewlett-Packard, I remember taking pride in being part of a company that recognized “corporate citizenship”: making a contribution to each community where they do business.

    I was appalled to watch Micron Technology (among so many others) turn that on its head, working to see how each community where they do business could contribute to their bottom line.

    Business does have to look out for itself, just as Governors have to be boosters, but the idea that Otter is going to convince business owners to move from Washington or Oregon to Idaho based on the quality of our governance is somewhere between laughable and embarrassing.

    March 13, 2010

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