Boosting jobs and the economy remains atop the to-do list of nearly every elected official you meet. In Georgia, many state officials have pitched tax reform as the best policy to do just that.
But their approach may be changing. At least, that’s the impression I got from Lt. Gov. Casey Cagle during an interview Monday at the Capitol.
Instead, expect Gov. Nathan Deal’s “competitiveness initiative” to take precedence. A group of agency heads and business leaders are due to make recommendations — in such subjects as infrastructure, innovation, education, business climate and government efficiency — before the 2012 legislative session begins in January.
Part of the focus, Cagle said, is diversifying our economy so that it’s no longer so reliant on construction. Industries such as aerospace and bioscience, along with manufacturing more generally, are among what he called Georgia’s strategic industries.
“I expect that we will have some very strong recommendations [for] creating strategic incentives that help those industries that we talk about in terms of diversifying our portfolio,” Cagle said. “We will be debating the removal of the energy tax, which is a huge impediment in terms of retaining and recruiting manufacturing to our state. …
“The other thing we’ll be looking at,” he continued, “is centered around financing, and venture funds. Attracting that venture capital to Georgia, and having ’em invest here in Georgia. And also have assets in Georgia.”
The financing angle is one that’s long been bandied about. Cagle focused specifically on the state’s need to keep the numerous innovative companies that are getting their starts at our universities — but which are leaving the state because the capital they need is based elsewhere.
“You have to partner with venture capital funds, and the state has to become an equity partner as well. Which is going to take investment, that can be used through tax credits, where the state can help create a very large fund that is run by the private sector, that invests in the technology coming out of our universities here in Georgia,” Cagle said.
“And those companies are not only incubated here, but they’re funded here, and they grow here, and they stay here. And that’s the model that has to occur. And it’s no different than you see in the Silicon Valley.”
Exactly how the state would become an “equity partner” is still being debated. So, too, are how big an investment the state may make, and where the money would come from.
Without writing off tax reform, Cagle suggested two reasons the competitiveness initiative’s proposals might take precedence over the revenue overhaul proposed months ago. First, he believes we should focus on those industries (aerospace, bioscience, etc.) in which we already have advantages.
“So, instead of a shotgun approach,” he said, referring to encouraging investment by broadening and flattening the tax code for all, “you take a very rifle-shot approach, a very strategic approach to: What is it we want? We want job creation, we want to encourage investments in Georgia, and we want to see it in a big, big way.”
Second, he’s not convinced legislators will know next spring if state revenues have sufficiently recovered from the recession, and if “the new structure’s going to give you the same amount of money that you had before. That was the problem last year.”
The template Cagle outlined is certainly an about-face from the tax-oriented model that used to be in favor — and, in some quarters, still is. Which brings us to a necessary observation:
Cagle is coming off a bruising start to his second term, in which a majority of GOP senators stripped him of many of his powers, only to relent somewhat when the Senate proved chaotic and their solidarity shaky.
Of that chaos, Cagle said only, “It’s pretty evident [the Senate] was dysfunctional this past session. … we’ve made some progress, and it’s my hope that we’ll make greater progress as the [next] session reaches.”
If the competitiveness initiative’s plans are embraced widely, they will offer a chance for Cagle and the others to prove they can play nice. If not, we may learn quickly just how much progress has been made.
– By Kyle Wingfield