State Rep. Doug Collins, now campaigning for a seat in the U.S. House, calls the recently-closed session of Georgia’s General Assembly a “banner year” for Gov. Nathan Deal.
As lawmakers prepared to head to the Capitol in January, Deal made it known he wanted them to keep Georgia’s economy in mind.
In his first major address of the legislative season, the governor outlined a plan to expand tax credits for job creators and to eliminate sales taxes on the energy used by agricultural and manufacturing industries.
The plan, he said, would incentivize business growth and help Georgia compete with its regional peers.
Before they left Atlanta last week, lawmakers made sure to carry much of those proposals through, though it wasn’t everything Deal wanted.
Georgia’s ability to attract employers pervaded most aspects of the legislative agenda this year. The issue even made its way into a rewrite of the state’s open meetings law, as lawmakers closed off access to economic development talks before an industry agrees to come to the state.
“On jobs, we feel like we’ve had a remarkably positive session,” Deal’s chief spokesman, Brian Robinson, said.
“The fact of the matter is, we got our agenda passed.”
The Georgia Chamber of Commerce doesn’t disagree. Joselyn Baker, the chamber’s senior vice president for external affairs, said this year’s session “was good for business in the state.”
The governor’s office also touts other legislative efforts at economic revival, including earmarking some $100 million in the state’s budget to pay for infrastructure or other developmental groundwork that might lure employers.
The money is from an approximately $800 million settlement in a mortgage fraud suit. Most of it will go directly to those whose homes were unfairly foreclosed or are struggling with their current mortgages.
The state had discretion with nearly an eighth of it, and the hope is that the decision to spend it on “closing money” for economic development projects will catch the eye of industries that otherwise wouldn’t give Georgia a second glance.
“People who perhaps did not have Georgia on their radar will be cold-calling our economic development department, because this is a game-changer,” Robinson said.
The proposals have at least one skeptic: Ray Hill, a senior lecturer at Emory’s Goizueta Business School, who specializes in managerial economics and finance.
Hill calls the $100 million earmark “one of the biggest wastes of time” he can imagine. He questions whether that $100 million wouldn’t have done more to stimulate the state’s economy if it had gone to help even more struggling homeowners.
“It’s plausible that $100 million spread across many thousands of Georgians would have created just as many jobs,” he said.
Hill also takes issue with the breaks lawmakers created for manufacturers, miners and those in the state’s large agriculture sector, waiving the tax charged on the energy they use in production.
Under the plan lawmakers passed, those taxes will fade away over a period of four years, which Sen. Butch Miller said will put Georgia on a level playing field with other states in the region who either don’t tax manufacturers for the energy they use in production or lower it.
“We were, frankly, at an unfair disadvantage,” Miller said.
Lawmakers also carried through a proposal that sought to expand an income tax credit program for businesses that create new jobs, giving areas around ports and military contractors access to the breaks. It also gave incoming industries more time to phase in their developments.
House Bill 868, which originally promised to lower the threshold for a job tax credit from a requirement of 50 new jobs to 15, no longer includes that provision.
Collins, the Gainesville Republican who carried the bill for the governor in the House, said the state didn’t have the money to back all their ambition and pass some form of tax reform this year. Lowering the jobs threshold on the income tax credits alone could have cost some $64 million, he said.
Even without the key provision, Collins said the law still serves as “very significant progress toward the promise of jobs.
Miller, one of legislators appointed to carry the governor’s proposals in the Senate, said lawmakers were still able to “advance the ball.”
“I’ve learned early on in this legislative venture that you rarely get everything you want,” Miller said. “If you advance the ball, that’s a good thing. (With HB 868), we didn’t get everything we wanted. We did advance the ball.”
Lawmakers will likely tout the tax breaks for industries in their districts as many of them campaign for re-election this summer.
A number of them are already connecting the tax breaks with the state’s persuasion of Caterpillar, which plans to build a factory in Clarke and Oconee counties, creating some 1,400 jobs.
When Sen. Don Balfour was questioned on the proposals as he carried it through the Senate, the Snellville Republican did just that.
“If we can bring companies to Georgia like we’re bringing Caterpillar to Georgia, we’ll be in good stead going forward,” Balfour said.
Hill, too, invokes the Caterpillar example in his analysis of the consequences of the industrial tax breaks.
“There’s no free lunch,” he said. “Caterpillar is going to pay less taxes. That means somebody’s going to have to pay higher taxes.”
Budget analysts have predicted that those and other changes to Georgia’s tax structure would create a roughly $50 million deficit next year, a gap equal to less than 1 percent of the current state budget.
To help make up the difference, legislators passed a law aimed at collecting billions in lost sales tax revenue from online retailers. The law would not technically put a new requirement on consumers; online shoppers who do not pay state sales tax at the point of sale are supposed to file it on their income tax returns.
Hill said one of his main problems with the idea is that it meddles with what is supposed to be a free market economy, putting lawmakers in charge of who deserves help from the government.
Hill is also concerned that there is rarely a public analysis of the cost and benefits of using tax breaks to lure employers.
“There’s no concept of the economic trade-offs being invoked,” he said.
And whether or not that analysis will show that the incentives were a “game-changer” for Georgia’s ability to recover quickly from the recession, House Speaker David Ralston pointed out to the Associated Press last week, creating the tax breaks showed lawmakers, in some form or fashion, answered a call from Georgians to focus on jobs and the economy.
In a poll funded by the Georgia Newspaper Partnership in the days leading up to the General Assembly’s session, 39 percent of Georgians polled said they wanted lawmakers to make jobs and the economy their top priority.
“What is important is we focused this session on the thing I think mattered most to Georgians, which was jobs,” said Ralston, R-Blue Ridge. “That’s why when I think about this session, I’m going to think about tax reform. I’m going to think about the initiatives that will make Georgia more competitive.”
The Associated Press contributed to this report.