Dr. Rick Franza, Dean of the Hull College of Business, discusses a different, timely business topic each Monday in this column. This week, he talks about Georgia’s strong economy. The interview has been edited for clarity and impact.
ABD: Economic news lately often seems bleak, but things are a bit different for the state of Georgia. Even after filling the Rainy Day Fund (which allows the state government to keep running during an economic downturn) to its legal limit, we had a surplus of $6.58 billion. What’s the story behind that?
Rick: Tax receipts are setting records month after month – they rose by 22 percent last year. Employment is good. The differentiator is that we’re attracting more new businesses in addition to our own entrepreneurs. And we’re less unionized than some states, so we’re not as beholden to pensions.
But the state has always been run pretty well. We’re a fiscally responsible state and by law, we can’t run a deficit. The legislators have to make some tough decisions. That’s a credit to the legislature’s ability to work across party lines. There’s a lot of bipartisan agreement when it comes to economic things. They set a great example for our U.S. Congress.
One reason Georgia has been so successful is it’s been astute in where it made investments. I’ve heard criticism when it invested in the film and TV industry, but that’s paid off tremendously.
ABD: How much of Georgia’s economic success has to do with minimal short-term closures in 2020 during the pandemic and a quicker return to normal business than many other states?
Rick: I think that’s absolutely a large part of it. Gov. Brian Kemp took a calculated risk but it worked out. The states that are sitting on a lot of money now are the ones that opened sooner and the ones that shut down schools and businesses did worse. And part of it was all the Federal funds we received during the pandemic.
ABD: Of course, the next question has to be, what is the state going to do with all this extra money?
Rick: Last year when we had a surplus, the state gave some of it back to taxpayers ($250 for individuals, $500 for married couples), so there may be more of that. I also think they’ll pick some spots to make investments – I think K-12 education would be a good place. I think that’s our weakest link. The state does a good job in higher education, but K-12 is trickier because there’s not as much control and it’s not as efficient. The weakest areas are the rural schools and the urban schools.
But there will also be investments in things like infrastructure, promoting small businesses, and making funds available to stimulate business. It’ll be a mix of investments and giving back money. We’ll get our fair share here in Augusta.
I think the next film-type investment for Georgia will be electric vehicles. Not just Rivian and other manufacturers, but all of their suppliers.
ABD: What does this economic windfall mean for Georgia’s economic future?
Rick: The state is doing better in GDP than the nation is, but even if we have a decrease in GDP, it’ll probably be less than in other states. We’re in better shape to stand an economic setback.
It’ll also make tax abatements and other incentives available for businesses wanting to relocate here. But the main reason companies decide where to relocate is the available workforce.
