Still a sound policy?

Legislators who agreed to cap Micron Technology’s property tax liability are reconsidering their position after Idaho’s largest employer announced a 10 percent workforce reduction.

In 2005, the Idaho Legislature passed a bill exempting property in excess of $800 million from the tax rolls. The bill, though favorable to Micron, was also viewed as an incentive for investment in Idaho from the high tech sector.  

Now, lawmakers and those inside the industry are reconsidering what incentives should be offered to draw businesses to the state.
“We need to establish good, sound tax policy that’s good for the entire state,” said Senate Tax Committee co-chair Brent Hill, R-Rexburg. “[Micron] needs to be doing what’s profitable for them and we need to establish good policy.”
Hill said as legislators they are looking at companies that will not only reinvest in the state, but bring good jobs that pay well, with good benefits, and bring solid tax revenues back to the communities where they are established. He added that short-term incentives do nothing for the state or the companies.
Sen. Jeff Siddoway, R-Terreton, said when the committee meets in August there will be plenty of discussion about incentives and tax relief for not only Micron, but across the board.
“It’s hard to review what the benefits and what the costs are, and whether you are being fair to everybody,” he said. “It’s such a big picture we have to determine what it is we’re going to do. Are we going to give more exemptions to use if they can, hopefully, do what they need to do? I don’t know.”
Daniel Francisco, director of Global Media Relations for Micron, responded to those concerns suggesting there is a short-sightedness on the part of state officials.
“Our business has a certain volatility,” he said, pointing to past rises and falls in demand and pricing in the memory development market. “We’ve made significant investments over the nation. We’ve just gone through a facility upgrade [in our Boise facility], and we’ve not ruled out a facility upgrade in Idaho.”  
Micron CEO Steve Appleton, in a television interview, said, “My advice, for the Legislature at large, is if they want to attract investment, independent of Micron, they have to continue to look at ways to do that because their competition, which are either other states or other countries, are doing it.”
The taxation committee is scheduled to meet in August and Hill said they will be doing a lot of assessment.
“One of the things we are evaluating is how effective are incentives to get [high-tech] into the state and remain in the state,” Hill said. “We need to look at other states’ [policies].”
Even Appleton is concerned with what incentives really provide to industries.
“When you look at what Micron’s done with its investment around this country, Virginia had a certain number of incentives for us, and Utah also provided some incentives for us to make some investment there – and obviously Idaho, we’ve been here for a long time,” he stated in an interview. “We’ve had some incentives to retain, attract, and continue to invest in this valley.”
Criticism by legislators about a lack of reinvestment is met harshly by some of its recipients, such as the Boise State University engineering department. Beginning in 1996, Micron Technology offered a $6 million challenge to construct new engineering buildings.
In January 2000, the Micron Engineering Center was dedicated as part of a $12.5 million three-building complex to house engineering programs and was also among seven companies to donate lab equipment and supplies in 2000 to develop a microfabrication lab.
In 2003, the foundation donated $2 million to start a materials science and engineering undergraduate program. In 2004, more lab equipment was donated. In 2005, $320,000 for a doctoral program in electrical and computer engineering was made. In addition, the company and its foundation provide scholarships for outstanding students.
Jake Baker, professor and chair of electrical and computer engineering, said it’s unfair to say that the department is the only sector of the community to benefit from Micron.
“I’ve seen some of the statements about the incentives being questioned, but I think not only has the college benefited in a number of ways, but the state has seen returns in the roads, solar power,” he said. “It’s not just as cut and dry as the college provides people here to fill jobs at Micron.”
Francisco said recent layoffs are part of a redirecting of the manufacturer’s operations. He pointed out that Micron is one of five companies worldwide that manufacture memory, and currently is the only one wholly based in the United States. Considerations of moving the company’s production facility overseas may be an option in the redirection process. Production and distribution to the consumer is critical, he said. Micron in recent years has operated a test site in China.
“We all sell the same parts,” he said, “so, it’s critical to be in alignment there.”
Francisco said while company officials evaluate investor concerns, corporate officials will be working on being viable for the future.