CARTERSVILLE — Despite the successes of 2006, economic development professionals say improved business incentives are needed for Georgia to remain competitive at attracting new jobs and investment.
They pitched their wish list Wednesday to a business incentives study committee for the state House of Representatives at the first of several meetings the committee has planned to gather ideas for the upcoming legislative session.
Topping the list were requests to expand existing tax breaks and increase the available funding of discretionary incentives — or grants and loans the state can offer for site preparation or other project costs for a new or expanding business.
Rep. Chuck Martin, R-Alpharetta, a member of the study committee, expressed initial support for the increased funding. However, he urged economic developers to provide research to demonstrate how the benefits outweigh the costs of incentives. “As we get to the (state budget) appropriations process, there’s always a competition for dollars,” he said.
Cullen Larson, executive director of the Georgia Economic Developers Association, brought suggestions such as allowing job tax credits and other types of tax credits to be applied toward a company’s payroll taxes. The credits now can be applied only to corporate income taxes, an area where some companies have no tax obligation or a tax obligation too small for the tax credit to be beneficial.
“For a credit to be an incentive, it has to have value,” Larson said.
Chris Clark, a deputy commissioner with the Georgia Department of Economic Development, also suggested expanding a state sales tax exemption — available now for some manufacturing and pollution control equipment — to include energy purchases.
Rep. Jeff Lewis, R-White, chairman of the study committee, also revived discussion on a controversial proposal from the past two legislative sessions, House Bill 218, which Lewis said he supported. The measure would have exempted certain documents and information from the state’s Open Records Act while negotiations with a company are in progress, but it has not been able to pass both bodies of the General Assembly.
Some legislators and members of the public had expressed concerns about the law, since it would make negotiations that affect the spending of taxpayer dollars private.
But Clark and Larson said secrecy is not what the development community wants but rather temporary confidentiality for companies that don’t want their plans made public until a deal is in its final stages.
“We need to be thinking about the release of information and our competitiveness,” Larson told the study committee. “It has to do with the timing of the release, not whether it’s released.”
He added any official action requiring a public vote, such as a property rezoning, would still be held in public under the rules of HB 218.
Clark said Georgia’s economic development activity is subject to more open records requirements than any of the surrounding states, which hurts its competitiveness. “We’re not on an equal playing field,” he said.
Earlier this month, the governor’s office announced economic development statistics for fiscal year 2006, stating it “shattered” the previous records in terms of planned job creation and investment. New and expanding companies announced plans during the year to spend $5.7 billion and create more than 24,000 jobs in Georgia. Those numbers were up from $1.43 billion and 10,270 jobs in fiscal 2005.
Of the 254 announcements in 2006, 31 of them required “deal-closing incentives,” beyond the standard tax credits and work-force training available to any qualifying company, Clark said.
He also provided estimates that the average job creation cost the state $4,164 in incentive money, up from $3,983 in 2005 but down from $5,356 in 2004.
INCENTIVE IDEAS
The state offers incentives, such as tax breaks and financial assistance, to encourage businesses to create jobs through new locations or expansions. Georgia economic development professionals made the following suggestions Wednesday to a state House study committee for revising the state’s incentive program: * Allow job tax credits and other credits to apply to payroll taxes, not just corporate income taxes, because many new companies have no income tax liability. * Include manufacturers’ energy purchases in a state sales-tax exemption, which now covers purchases of certain manufacturing and pollution-control equipment. * Expand tax credits available for corporate headquarters to include all jobs created, not just certain types of jobs. * Create tax-credit program for white-collar jobs not at a corporate headquarters. * Increase money available for discretionary incentives, or deal-closing money that the state uses to help with site preparation or other project costs. Chris Clark of the Georgia Department of Economic Development said the state has about $50 million in annual grant money available, plus some revolving loan money, most of it for rural Georgia. The state needs more, he said, especially in the REBA fund, dedicated to metro Atlanta, which had about $5 million last year. * Redesign and improve the tax-credit program for research-and-development projects, which would line up with the state’s goal of recruiting life sciences and biotechnology companies. * Create incentives targeted at tourism developments, such as resorts and theme parks. * Create “green building” incentives to help companies build more energy-efficient facilities. * Protect the confidentiality of prospective companies by exempting certain records from the Open Records Act while negotiations are ongoing.
