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Deal Legislative Agenda Includes Changes to Jobs Tax Credit Programs

Mike Klein

Governor Nathan Deal has unveiled a package of tax reforms and tax credits which he says are essential to make Georgia the number one state in the nation to do business.  One theme was familiar – reducing the energy tax on manufacturing – but other elements were new from the Competiveness Initiative Task Force that the governor announced one year ago.

“Today, in executive offices right here in Georgia, business leaders are making the business decision to  expand manufacturing activity and facilities in neighboring states,” Deal said at the state Chamber of Commerce “Eggs and Issues” breakfast.  “Every time they make that decision, we miss out on new investment in our communities and new opportunities for Georgians.”

Deal’s address to some 2,500 breakfast-goers was the first of two major speeches today that outline his legislative agenda.  Tonight the Governor will deliver his second State of the State address to the General Assembly.  His 7:00pm speech will be carried on GPB-TV and Radio.

The Governor’s tax reform initiative has four primary proposals.  First, Deal called for elimination of sales tax paid on energy used in manufacturing.  “Because the sales tax is intended to be a tax on consumption, it should not be applied to business inputs,” the Governor said.

Second, Deal proposed sales and use tax exemptions for construction materials “used in projects of regional significance.  This is an important business climate issue and we need the ability to authorize this exemption when competing for projects creating large number of jobs.”

Governor Nathan Deal (File Photo)

Third, the Governor called for a re-do on the state’s job tax credits program that Deal said was written “in 1994 when the competitive landscape was far different than the one our businesses operate in today.”  Deal said the target would be assistance for small businesses.

“The present tax credit system is based on the mistaken notion that Atlanta competes with Rome or even Metter for jobs.  It doesn’t,” the Governor said.  “What we need is a tax credit program that embraces the realities on the ground – that Atlanta is competing with Charlotte and Dallas (and) that Floyd County is competing with operators just over the state line…”

Deal also proposed a re-do on the 2009 quality jobs tax credit program that designed to assist companies that bring high-paying positions into the state.  Currently, companies are required to create 50 or more jobs to obtain the credit.  The governor proposed reducing that to 15 jobs.

“Most companies now listed in the S&P 500 began with 50 or fewer employees,” Deal said. “We need to make the changes that will ensure more of these small, promising businesses are choosing to call Georgia home.”

The Governor emphasized his support for the regional transportation referendum that will be on the ballot this July, telling breakfast-goers, “We need new projects to maintain roads and bridges, that left untended, will cost taxpayers far more down the road.”

Deal said his Fiscal 2013 proposed budget will include $46.7 million in bonds to continue work on the Savannah River Harbor project, bring the total state commitment to more than $136 million over three years.  Georgia is awaiting federal decisions on hundreds of millions more.

The Governor sounded a cautiously optimistic tone – without details – in the decades long water dispute between Georgia, Florida and Alabama.  The U.S. Army Corps of Engineers is under a federal court order decision to make new Lake Lanier basin withdrawal recommendations.

“Regarding our long-running battle with our neighbors to the West and South, my team is now negotiating with a more favorable legal backdrop, and we are in a much better position to strike a lasting deal that makes sense for Georgia,” Deal said.

Georgia’s population is predicted to grow by 4.6 million over the next two decades.  “It is imperative that we expand water supply across the state,” Deal said.  “Let me restate my priority. We must create new reservoirs to address Georgia’s long-term water needs!”

Deal said his proposed budget includes $45.7 million for water supply projects.  That is the second-year installment on a $300 million, four-year initiative Deal announced one year ago.  The Governor also said starting today local governments can apply for low-interest state loans for local water projects.

The Governor said this evening’s State of the State address will focus on education.

(Mike Klein is Editor at the Georgia Public Policy Foundation)

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January 10, 2012 - Posted by | Uncategorized | , , , ,

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