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This month, Jay Larsen, president and founder of the Idaho Technology Council, discussed with TechVoice legislation he and his organization have championed to grow Idaho’s technology ecosystem. Read how the council’s advocacy efforts influenced those bills, the lessons Larsen learned along the way and how the Idaho Technology Council’s partnership with TechVoice has helped in these efforts.
I understand you’ve been very active at the state level with several bills around tax reform, patent reform and workforce development. How will those bills affect your members?
Idaho has been a very good state when it comes to setting up very predictive policy in support of businesses. However, in late 2012, our state tax authorities ruled that software provided through cloud computing networks, commonly referred to as software as a service was subject to the state’s 6 percent sales tax. The Idaho ruling characterized all computer software as tangible property subject to tax, no matter how it is made accessible to users. Several of our members started getting audited by the Idaho State Tax Commission and owed back taxes ranging from $20,000 to half a million dollars.
We got involved with the issue during the last legislative session. We championed the Cloud Services Clarification Act, which basically rewrote the tax code to say that SaaS and other cloud services are not subject to Idaho sales tax. We got that legislation through and it had resounding, almost 100 percent support from the legislature and our governor. It showed that the governor and our legislature are very supportive of growing a stronger, high-tech software community in Idaho.
We went through the rules process with the state tax commission to define how the law will be implemented. We used language like “load and leave,” which the state tax commission wanted us to use. What we found out was that this language became somewhat nebulous because we couldn’t really define where it was.
Their interpretation was if you loaded a document or a picture — anything off a cloud service — that it should be taxable. Because we had this impasse on interpretation in several areas, we didn’t implement anything on the law. We decided to make the language broader, and it passed strongly again. It was House Bill 598. In fact, we had a signing ceremony with the governor this month!
Another piece of legislation we worked on was the Patent Troll Bill. The bill, which was introduced in February and recently passed, aims to crack down on so-called patent trolls; those who send letters threatening patent infringement litigation or demand license fees or fish for companies willing to settle to avoid litigation. This law sends a strong message to patent trolls that their actions are not going to be tolerated in Idaho. We just want to make sure people know that we are very supportive of patents, but we don’t want to have patent trolls in our state. If they come to our state, there is a legal course of action that we will take against them. That passed this legislative session.
In the workforce development arena we passed — through the Idaho State Board of Education and then through the Idaho legislature — [legislation stating] that a high school AP computer science course would count toward a math or science credit versus an elective and toward high school graduation. Computer science is an amazing area, and the state of Idaho is recognizing it as such. We now have computer science recognized as a fundamental skill.
What role has advocacy played in influencing those bills?
Five years ago, when we started the Idaho Technology Council, there was no advocacy group able to represent the voice of innovation and technology from a local industry perspective. One of the first things we did was have a meeting with members who didn’t think our legislature would be responsive to them. I explained that the governor has indicated that he really wants the private sector to come out and tell him what we need to thrive and grow a knowledge-based economy in Idaho. We have a legislature that supports growing these innovative and knowledge-based sectors of agriscience, computer science, energy and materials science, and advanced manufacturing. Those are our main areas.
Two years ago, we passed the Idaho Global Entrepreneurial Mission. This program was created to accelerate the process of commercializing new technologies that can be used to strengthen Idaho’s economy. This was the first time our legislature voted to support putting $5 million in general fund dollars to spur local innovation through research.
What are some of the lessons you’ve learned that have shaped how you engage with your members in advocacy?
We have a strong public advocacy committee that is represented by Mike Reynoldson, who is also responsible for public policy at Micron Technology. He’s been a very strong leader to the Idaho Technology Council, who understands what we have to do.
We are also fortunate that the Idaho legislation is very pro innovation. We are also very proactive with communication efforts with our legislators. We have quarterly meetings with our governor, as well as several face-to-face meetings with committees and individual legislators, senators and representatives of our state.
Everybody working together will make it happen. In my experience, fragmentation in a legislative process creates an easy way for legislators to say that what you have in mind is not right. You must have a unified voice. And to do that, you need to have strong coalitions to make things happen. I think that’s the foundation for why we’ve been so successful within the advocacy role we’ve been playing. We are extremely fortunate to have the support from our partner organizations such as the chambers of commerce organizations in the state, the Idaho Association of Commerce and Industry as well as the many companies that are part of the Idaho Technology Council.
Another key ingredient to make things happen is to remain very positive while having a healthy dose of realism. I’ve just seen so many things blow up because it wasn’t approached the right way with the right attitude.
How has the TechVoice partnership helped in these efforts?
TechVoice allows us to be able to stay on top of issues. TechVoice has helped a lot in making sure we understand the dynamics that take place state-to-state but also on a federal level. On patent reform, Vermont had some key legislation that was taking place last year that we really looked at through our partnership with TechVoice.