Gov. Perdue announces legislation to encourage economic development

Thu, 02/19/2009 - 12:16pm
By: Cal Beverly

New and enhanced incentives could bring large projects, high-paying jobs to Georgia

ATLANTA – Governor Sonny Perdue announced Feb. 18 that House Ways and Means Committee Chairman Rep. Larry O’Neal has introduced a legislative package that will position Georgia as a more aggressive competitor for economic development projects that grow jobs and investment in the state. The proposed changes to the “Business Expansion Support” Act (BEST) legislation in House Bill 438 and House Bill 439 would enhance and update existing tax credit programs for qualified businesses, including both new and existing companies.

“Now is the time to arm ourselves with the tools that will help bring quality jobs to Georgia as we prepare for economic recovery,” said Governor Sonny Perdue. “Our citizens are the ultimate beneficiaries when we can offer a competitive edge to companies who want to expand in Georgia or bring jobs here.”

The proposed changes to BEST include six components that will increase Georgia’s overall competitiveness for economic development projects having a high impact on the state through large job numbers and/or high salaries.

“Our citizens deserve a future in Georgia that is stable and prosperous, even in times of economic hardship,” said Chairman O’Neal. “This legislation will ensure stability and ensure that Georgia moves forward as one of the most competitive forces nationally and globally.”

The Quality Jobs Tax Credit re-purposes the existing headquarters tax credit, which would no longer be utilized. Companies would receive a benefit for establishing jobs paying a higher-than-average wage for the proposed county. The tax credit would be based on a scaled system and could apply to a headquarters location or any other project that met the established criteria of high-paying jobs.

The R&D Tax Credit will encourage innovative companies in Georgia by strengthening the existing tax credit. It removes the requirement that emerging companies have a positive net income for the previous three years, a restriction challenging to most new companies in the technology field. Instead, the Georgia tax credit will now be tied to the federal calculation, which states that a qualified company may claim 10 percent of its increased qualified research over gross receipts. Eligible companies must continue to qualify for a research credit under the IRS code. Emerging companies may use the credit against payroll withholding for their first five years of operation.

A new version of the Port Tax Credit will drive increased jobs and investment in the state by encouraging companies to do more business through Georgia’s ports. The credit would be expanded to apply to imports as well as exports. It would also change the existing code by calculating port tax credits tied to base port usage figures that are updated yearly instead of wedded to the current fixed, 1997 figure.

Changes to the existing Retraining Tax Credit will return the measure to its original intent: helping Georgia companies stay competitive by assisting employees with retraining for new technologies, equipment and machinery. The language of the code would be clarified to establish a stronger definition of the business and activities eligible for the tax credit.

Part of the changes to the BEST legislation includes a Discretionary Withholding Option, a tool the state could employ in winning a particularly competitive project with significant regional economic development impact. This option gives the state the ability to offer payroll withholding benefits once all other tax liability has been exhausted. Awards would be structured similarly to the existing OneGeorgia REBA and EDGE grants, in which the Georgia Department of Economic Development, with the approval of the Governor, recommends the option, and the Georgia Department of Community Affairs processes the final approval.

Finally, the BEST package includes a Mega Tax Credit intended for large, high-impact economic development projects, such as the Kia automotive manufacturing plant, which, together with its suppliers, is creating thousands of jobs in West Georgia. A qualifying company must agree to create a minimum of 1,800 jobs and either invest a minimum of $450 million in a project or bring an annual payroll of $150 million to the state.

Companies who benefit from any part of the BEST program must fulfill the commitments they made to receive them or forfeit their benefits. None of the measures are retroactive.

“We studied our incentives program and determined that these are practical yet aggressive changes that will set Georgia apart from our competition,” said Commissioner Ken Stewart of the Georgia Department of Economic Development. “We are fortunate to have an abundance of business assets in our workforce, logistics and quality of life in Georgia, and with these changes we will ensure we have the tools to attract the quality jobs we want for Georgians. I’m proud the economic development community of Georgia has rallied around the BEST legislation, and feel we’re poised on the edge of some great opportunities.”

Economic development professionals from around the state have offered their support for this much-needed, overdue update of Georgia’s statutory incentive program.

“This legislation sends a signal to the country and the world that Georgia is aggressively competing for business,” stated Sam A. Williams, president of the Metro Atlanta Chamber. “We applaud the leadership of Governor Perdue and Chairman O’Neal in putting Georgia in a strong position to attract the best companies and the highest-paying jobs. That is especially important now as the competition for jobs and economic development is growing more fiercely every day.”

“Our economic development efforts in the Columbus region could not be successful without the State of Georgia partnership,” said Becca Hardin, executive vice president of economic development for the Greater Columbus Chamber of Commerce. “The proposed changes in the BEST legislation are significant and will enable us to continue to be competitive in the international economic game.”

“The proposed enhancements to the BEST legislation accomplish several things,” said Patrick J. Topping, Senior Vice President of the Macon Economic Development Commission. “One, it provides our communities a strong tool to use when competing for jobs that will earn above the average in the county now. These are jobs that presumably would require a higher level of training and skills, and carry with them substantial investments from the company. These jobs could also bring with them ancillary support jobs and would not be easily relocated.

“Also, it addresses a major criticism we hear from site selection consultants,” Topping continued. “In the past, companies we have recruited often discount the Job Tax Credit because in most cases they can not apply those credits to their payroll withholding tax. The Quality Jobs Tax Credit addresses that concern. Finally, the interpretation that the Ports Tax Credit applies to import shipments as well as export shipments provides an incentive tool we can use to recruit companies looking to utilize our ports as a means of entry into the US market for distribution as well as for manufacturing.”

“Quality jobs should be the ultimate goal of all Georgia economic developers. To be able to better recruit a high-paying job to a community, regardless of the size of the project, will help us grow the type of economy that our citizens deserve,” concluded Lynn Pitts, senior vice president of the Savannah Economic Development Authority.

— Posted 02-19-09


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