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Analysis: Business growth, not social spending remains top Ga. priority

Monday, Feb. 18, 2013 10:21 AM
Last updated 6:38 PM
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ATLANTA — President Obama argued last week in his State of the Union and during a trip to Atlanta that investment is needed to continue the pace of job creation, but Georgia’s leaders have a different view.

Georgia Government Nathan Deal speaks in March 2012 about bringing jobs back to Georgia during the Groundbreaking Ceremony for the Caterpillar plant near Athens.  AJ REYNOLDS/MORRIS NEWS SERVICE
AJ REYNOLDS/MORRIS NEWS SERVICE
Georgia Government Nathan Deal speaks in March 2012 about bringing jobs back to Georgia during the Groundbreaking Ceremony for the Caterpillar plant near Athens.

There are plenty of Democrats in Georgia arguing for more spending on education, health care and transportation, but Gov. Nathan Deal and his followers are loyal to a strategy of cutting taxes. From Deal’s perspective, he’s doing what he knows works. During his lifetime, Georgia’s major draw for employers has been cheap land, labor, energy and taxes.

He said it in his State of the State address last month.

“More and more businesses are deciding to make Georgia their home,” he said. “Some of the reasons for these decisions are government policies of low taxes and reasonable regulations.”

Other policymakers have also kept their eyes on the expense side of the ledger. The state Public Service Commission, for instance, began urging Georgia Power Co. to embrace more alternative sources of electricity such as solar only when the cost of doing so dropped precipitously in the past year or two at the same time new environmental regulations have driven up the price of formerly cheap, coal-based generation the state has traditionally relied on.

“Solar has now entered the realm of competitive energy,” PSC member Chuck Eaton said. “There have been folks that have been critical that we haven’t gotten in earlier, but really, what they are saying is, ‘You should have paid three times for the solar what you are paying today.’ ”

Like many Republicans, Eaton campaigned for re-election last year on the state’s removal of the sales tax on electricity and natural gas used by manufacturers. Deal and legislative leaders were eager to remove the tax to keep drawing employers.

A point of pride for them is that since the latest recession, budget-cutting has allowed them to hold taxes nearly level, even as the state’s populationgrew. That has resulted in Georgia’s becoming the state with the lowest taxes per person in the nation, a bragging point sprinkled in many politicians’ speeches these days.

On the other hand, liberals point to the relative tax rate and see it as an opportunity to raise taxes considerably without coming close to the national average. The state would still be competitive enough to bring in employers today while having money to invest in education and infrastructure as a long-range strategy for developing an industrial selling point based on workforce quality and lifestyle rather than bargains.

Those same folks traditionallysupported social programs such as education and health care for humanitarian reasons, but in the post-recession environment of weakened employment growth, they’ve begun to phrase their arguments in terms of jobs.

“Gov. Nathan Deal’s proposed budget for the coming fiscal year continues an unfortunate path Georgia has been on since the start of the recession in 2008,” notes Alan Essig, director of the Georgia Budget and Policy Institute, an Atlanta-based think tank that advocates for more social spending. “Its emphasis on more cuts to vital services threatens Georgia’s ability to create jobs and build a strong economy.”

Deal anticipated the criticism in his State of the State.

“While times have been tough and we have had to make difficult choices, I will not lead our state with a Doomsday mind-set, reacting erratically and hastily based on fear or ignorance,” the governor said.

One area of profound disagreement between the conservatives and the liberals is over Deal’s decision not to accept Obama’s offer of federal aid if the state expands eligibility for Medicaid, the health plan for the poor. The Cover Georgia coalition will host a two-hour briefing this week for the Capitol Press Corps on how the state would benefit, including as many as 70,000 new jobs.

“I did not judge it prudent to expand the eligible population of an entitlement program by adding an additional 620,000 new enrollees since our state is already spending approximately $2.5 billion in state taxpayer funds annually,” Deal said.

Since the General Assembly convened last month, and throughout the 40-day session until it wraps up some time in April, a parade of advocates is marching to the Capitol to ask for money funding for one government service or another. Their conversations among themselves are often the same as they express bewilderment at why the conservatives running the state refuse to see the benefit in social services.

Often, they point to other states like Massachusetts or California that have much higher taxes but also higher personal incomes than Georgia and surrounding states. They’re not seeing the situation from Deal’s perspective.

Usually, Georgia isn’t competing with California or Massachusetts for factories but rather with Alabama, Tennessee and South Carolina which are also other low-cost states for companies determined to flee the high-cost regions or to be near the South’s growing consumer market. That’s a competition Deal has witnessed for seven decades, starting in his childhood in rural Sandersville.

Companies didn’t set up shop in Sandersville for the cultural amenities or the nearby centers of higher learning. They were looking for cheap land, labor and taxes.

That’s a recipe that’s proven itself, and it’s hard to argue with success -- as Essig and the Cover Georgia discover each day at the Capitol.


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