Sun, May 26, 2024

Making sure Georgia gets a big bang for its buck

There’s no doubt that tax incentives have been effective in attracting new businesses in the CSRA and across the state, but a panel of Georgia lawmakers is holding meetings to make sure there is a balance.

The Joint Tax Credit Review panel is an offshoot of the 2023 legislative session. The credits are to attract new businesses to locate in the Peach State. Elected officials want to determine which credits are working, which aren’t, and if any need to be revised or terminated.

“They are designed to stimulate economic growth. They’re designed to facilitate the expansion of business research, hiring new employees,” state senator, Max Burns explained to the Columbia County Chamber of Commerce at the Nov. 2 annual pre-legislative breakfast. “Periodically, at least, every couple or three years, we go through an evaluation of all of the tax credits that are offered throughout the state and there are a lot of them.”

According to the Georgia Department of Economic Development, “Our portfolio of incentives begins with a tax credit to spur job creation and includes an array of other credits for investing in R&D, shipping through ports, and making key expansion investments. Georgia tax exemptions are just as robust: they can save you lots of money in startup and operating costs. All of this is anchored by a 5.75% corporate tax rate based on single-factor apportionment.”

The panel’s first meeting was in mid-June. They heard from several state departments including Economic Development and Revenue, along with State Economist, Dr. Jeffrey Dorfman from the University of Georgia.

The most recent session was on November 8 in Columbus. The focus was one of the largest tax credit programs, the Housing Tax Credit.

Philip Gilman, deputy commissioner for housing assistance and development at the Department of Community Affairs, said the credit covers the range of housing projects in the state, rental or home ownership, new construction, or rehabilitation. One goal is to create or rehabilitate affordable rent housing to house Georgia’s growing population.

“It’s not a subsidy program. It’s rent that is set at levels that are affordable to certain income levels. “From an agency perspective, we appreciate this program because it’s efficient,” he explained. “We already have a federal tax credit program that we built an entire infrastructure for it. So, by having a side-by-side, mirrored state credit, we’re able to use that exact same infrastructure and not add to the administrative burden for the state. It’s a pay-for-performance program, and it’s a public-private partnership. So, not $1 of state money goes at risk or is spent until these properties are actually built and folks are moving in.”

Also under review is Georgia’s most successful tax incentive program, the Georgia Entertainment Industry Investment Act (GEIIA). It offers tax incentives to companies to bring film and television productions to Georgia.

According to the state’s Department of Economic Development, it grants an income tax credit of 20%, “to qualified productions which include feature films, television movies or series, documentaries, commercials, and music video projects. Feature films, television projects, and music videos are also eligible to receive an additional 10% Georgia Entertainment Promotion (GEP) tax credit after certain distribution requirements and agreed upon marketing promotion for the state have been met,”

Supporters of the program say it is directly responsible for the growth of the film industry in Georgia. One thing lawmakers are reviewing is whether it is time to create a cap on the program, Currently, it is uncapped meaning that all productions that meet the criteria are eligible for up to a 30% discount on their costs. According to a state report, last year that translated to a film tax incentive of $1.3 billion, making it the largest tax credit in the state.

Other states that offer a similar incentive have a cap. California caps its program at $330 million a year. New York, according to its Empire State Development office, has a $700 million cap.

Burns said the goal is not to reduce or eliminate any tax incentives currently being offered.

“Our objective is to understand the return on investment on those tax credits,” he said.

“The objective is to attract jobs, to employ people, to enhance the tax base. I will tell you that one of our objectives is to reduce our overall Georgia income tax. We have to reduce the Georgia income tax, but we have to find ways to offset the cost of that right now.”

The next meeting of the Joint Tax Credit Review Panel is Wednesday, Nov. 29 in Room 403 of the Georgia Capitol. It will begin at 11:00 a.m. It will be livestreamed at: https://www.house.ga.gov/Committees/en-US/JointTaxCreditReview.aspx. Videos of the five earlier sessions are also available on that website.

The panel’s findings and recommendations will be presented to the legislature in the 2024 session.

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