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Have Georgia taxpayers paid too much for jobs?

Posted: May 9, 2012 - 12:01am

There was big news coming out of the governor’s office recently about an agreement reached with Baxter International, an Illinois healthcare company.

Gov. Nathan Deal announced that Baxter will open a pharmaceutical manufacturing facility east of Atlanta that puts as many as 1,500 people to work. The Baxter project, Deal said, “marks a new era in the growth of our biosciences industry.”

It also marks a major commitment of state and local tax funds. The Department of Economic Development assembled a package of tax exemptions, tax credits and government grants for Baxter that could reach $136 million. Tax breaks and expenditures by local governments could be worth another $107 million.

If Baxter takes full advantage of the incentives, it potentially could receive in excess of $240 million. That averages out to more than $150,000 per job.

That’s in the same territory as the incentives Kia Motors received for agreeing to locate an auto assembly plant in West Point.

Then-governor Sonny Perdue announced in 2006 that Kia had been offered a package of incentives worth $410 million to come to Georgia, an amount that subsequently grew to more than $450 million. The Kia plant has slightly more than 3,000 workers, so the incentives are about $150,000 for each job created.

Last February, Deal announced that Caterpillar, the equipment manufacturer, will locate a facility in the Athens area that could create up to 1,400 jobs. The package of incentives offered by state and local government agencies totaled about $77 million, or $55,000 per job.

I’m glad Kia decided to build that assembly plant in West Point. If a bio-tech company and a heavy equipment manufacturer want to open new facilities here, that’s good news as well.

Honesty and common sense, however, also require that we ask this question: Are these projects worth the money being taken from Georgia’s taxpayers?

Deal will argue that no price is too high if it means new business for the state. I know that when Deal runs for another term in 2014, he will cite the Caterpillar and Baxter decisions as proof that he was successful in “bringing jobs to Georgia.”

At some point, however, you can overpay for these things. Shortly after the Caterpillar announcement was made, Doug Bachtel, a University of Georgia demographer, told Athens Banner-Herald reporter Blake Aued: “You’ve really got to be careful. Boy, I tell you, sometimes these things can cost you more than they’re worth.”

If they meet expectations, the Kia, Baxter and Caterpillar projects will create a combined total of just under 6,000 jobs. The total amount of government incentives that have been paid or will be paid to these corporations could exceed $750 million.

That is three-quarters of a billion dollars for 6,000 jobs.

The latest labor department figures show that there are 239,200 people in Georgia classified as long-term unemployed – those who have been unable to find a job for more than 27 weeks. The long-term unemployed make up 56 percent of all jobless workers in the state.

Do the arithmetic and you will see that 6,000 jobs barely makes a dent in the 239,200 long-term unemployed – but government officials have agreed to pay three-quarters of a billion dollars to bring those 6,000 new jobs to Georgia.

Is that too much money for taxpayers to shell out? That question would be worthy of debate among our elected officials, but there was no debate over it.

These deals were all negotiated privately, and the details were not released until the contracts were signed. If any taxpayer thought we were paying too much for those projects, they never had the chance to express that opinion before the final offers were made.

These types of deals will become even more secretive under the so-called “open records law” that Deal recently signed. The new law says all state documents pertaining to financial incentives offered for major projects can be kept secret from the media and everyone else until five days after a final commitment is made.

You not only will have no say in how your tax funds are being spent to lure new business projects to Georgia – you won’t even be allowed to see the official records pertaining to those deals until after they’re finalized.

That sounds like a bad deal to me.

(Tom Crawford is editor of The Georgia Report, an Internet news service at gareport.com.)

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Comments (3)

Little Lamb

Zero Sum

Because of the duration of the recession, there are fewer jobs available in the United States in May, 2012 than there were in May, 2008. Therefore, state and local governments cannot count on a rising tide to lift all boats; so they must employ zero-sum tactics to take jobs away from other states and communities. That's what Deal is doing.

Tom Crawford has never approved of any action of any Republican. So this column is true to form.

Riverman1

Look at is as lowering taxes on corporations.

I view the whole process of luring corporations to a state as a way the state can lessen the impact of taxes the company has to pay to government. Since the feds are reluctant to cut anything, smart states will step up.

Many Arrows

Deal the Jobs Cannibal

Perot was right about the giant sucking sound of jobs leaving the USA. He probably did not see how great the interstate cannibalization that is happening. $150,000 per job? Pass the salt and pepper, this course is too bland.

As for Deal, isn't his fuzzy math the reason he found himself $3 million in debt?

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