Moderated by Rick Badie
Shortly after being elected, Gov. Nathan Deal and Georgia Chamber of Commerce officials launched the Competitive Initiative to grow the state’s economy. Deal recently asked members who serve on a “competitive panel” to continue its review of state tax legislation, an advisory role he explains in today’s guest column. A business owner writes that the initiative propels Georgia forward. Meanwhile, the executive director of a think tank suggests too much power is being ceded to business leaders.
Business feedback makes sense
By Nathan Deal
I work every day to bring good jobs to Georgia. That goal tops my priority list, and all state government endeavors fall under the umbrella of making Georgia a great place to live and work.
Pardon me if you’ve heard me say this before, but it’s my aim to make Georgia the No. 1 place in the nation in which to do business. A pro-business environment is a prerequisite for a pro-jobs environment. We’ve seen significant progress. NBC ranks our state No. 1 in workforce development. Area Development Magazine ranks us the No. 2 best place to do business. The Tax Institute reports that Georgians bear the lowest per capita tax burden in the nation.
These positive indicators don’t happen by accident. They require hard work, vision and a keen eye on our competitors.
That’s why in 2011,I launched the Competitiveness Initiative in coordination with the Georgia Chamber of Commerce.
The Competitiveness Initiative brought together business and community leaders from every corner of this state and held a series of regional meetings throughout that year.
The meetings were brainstorming sessions that led to concrete policy proposals. Some suggestions, such as removing the tax on energy used in manufacturing, found their way into the 2012 tax reform legislation that I signed into law. Caterpillar and Engineered Floors cited that tax cut as one reason they built new plants near Athens and Dalton, respectively, creating more than 3,800 jobs.
The Competitiveness Initiative also played a role in reviewing the scores of tax credits in our code to consolidate and modernize our system, which had become an outdated patchwork of exemptions through the years.
These efforts have proved so productive, I decided to ask members to continue to vet new proposals for adding or removing tax credits for particular industries.
The group doesn’t make policy; it makes recommendations that policymakers can accept, alter or reject. When a state is looking for ways to create new jobs and generate wealth, it makes sense to get feedback from business leaders who know firsthand what companies look for.
Beyond the nuts and bolts of improving our business climate, I see the Competitiveness Initiative as a catalyst for positive change in Georgia. Speaking to the group earlier this month, I challenged members to work with me as we continue to implement cost-saving and lifesaving reforms in our criminal justice system.
The next step will focus on helping former inmates get the job skills they will need to stay employed and out of trouble. Once we put the proper programs in place to give them training, we’ll need partners in the private sector willing to give them a second chance at life.
That program symbolizes what the Competitiveness Initiative is all about: Making sure that every Georgian who has the will to work, gets the chance to work.
Nathan Deal is the governor of Georgia.
Review tax subsidy programs
By Alan Essig
Georgia gives out hundreds of millions of dollars in business tax breaks every year with little rhyme or reason. The state needs to create an unbiased and fact-based system to weigh the costs and benefits of tax incentives and exemptions. Gov. Nathan Deal’s ongoing Georgia Competitiveness Initiative is not set up to meet those objective standards.
The initiative is led by about two dozen people from across the state, nearly all representing for-profit corporate interests. Their charge is to recommend ways to strengthen the business climate in Georgia. Members of the initiative met in Dalton and Tifton this month to hear presentations from industry representatives angling for state tax breaks. The members will deliver recommendations to the governor to help him choose which tax breaks to support.
It is fine for chamber members to push for tax breaks they think will strengthen the state’s economy. But it is clearly a conflict when the system gives business leaders so much clout in a decision-making process that relies on playing hunches.
Georgia needs a review process based on facts and impartial analysis, not one that rests largely on the testimony of industry advocates and lobbyists. An arms-length review should answer such questions as: How many jobs will be filled by Georgians versus transplants? Will tax breaks generate new jobs, or just subsidize existing plans that would have taken place without them? And how many jobs would be lost from budget cuts required to pay for lost tax revenue?
These questions demand detailed analysis by qualified experts, not just guesswork by parties that may stand to benefit from the tax breaks they recommend.
There is a better way. Rhode Island recently passed legislation that provides a tax-break evaluation model for Georgia to adopt. Rhode Island requires reviews every three years of all tax-subsidy programs by the state’s Office of Revenue Analysis. The reviews measure the benefit and cost of each subsidy, including its impact on the state’s overall budget and economy. The governor’s budget proposal then must make a recommendation to continue the tax break, make changes or end the program. Budget hearings in the legislature provide a forum to discuss and compare the results and costs of tax breaks alongside other types of state spending.
The Pew Center on the States says Rhode Island is leading the way for states to evaluate economic subsidies.
Georgia’s tax code is past due for a thorough review. State taxpayers effectively spend nearly $300 million each year on tax credits for economic development with only anecdotal evidence of a return. Delegating authority to an unelected group of executives representing corporate interests is the wrong answer to the problem. Proposed tax breaks should be subject to accountable, transparent, fact-based examination. It is a better way for the state to do business.
Alan Essig is executive director of the Georgia Budget and Policy Institute.
Initiative propels Georgia forward
By John Watson
One of the most important responsibilities for any governor is economic development,directly through their interaction with companies and indirectly through the image the state projects. Companies seek environments that are stable, supportive and with tax and regulatory environments that will not impede success. The states that can offer that combination ultimately benefit from an expanded tax base and jobs for their citizens.
Georgia has benefited from a long history of governors and elected officials who understood the impact their actions would have on our economy. That tradition has continued with Gov. Nathan Deal, who as one of his first actions announced the creation of the Georgia Competitiveness Initiative — a partnership of the public and private sectors focused on economic development that will hasten our state’s recovery from the most recent recession and put programs and policies in place that will benefit our state for decades.
Gov. Deal knew the best way to learn what businesses need to create jobs was to go directly to the source. He formed a steering committee of representatives from a variety of industries and leaders of key state agencies. That team spent most of 2011 gathering input from thousands of Georgians both through surveys and public hearings held throughout the state.
The results of that initial effort have already made a positive impact. Companies are choosing to locate or expand in Georgia because the sales tax on energy used during the manufacturing process was removed. New workforce development programs have been created, and new funding sources are in place, to attract start-ups and entrepreneurs. Water supply projects have been funded, and the state has sharpened its focus on the strategic industries most likely to call Georgia home.
Those were all great steps forward. Gov. Deal knew our work was not done, so he reconvened the committee to take a closer look at the tax incentives and exemptions offered as part of the economic development process. Once again, this process has included open meetings, giving anyone an opportunity to share ideas. Recommendations will be developed over the next few months. The governor will determine which he will ask the General Assembly to support.
Issues being examined by this initiative are ones that Gov. Deal would have addressed with or without the assistance of the committee he formed or the public input that has been received. In a time people are feeling disenfranchised from their elected leaders, he invited involvement. I believe that has made this process stronger and more effective, as it has ensured meaningful results that will benefit Georgia businesses and, as a result of new jobs and investment, the families that call our state home.
John K. Watson, former chief of staff for Gov. Sonny Perdue, is involved in commercial real estate.