Originally created 10/17/00

Tax credit plans cut into growth



McDuffie and Columbia counties are neighbors, but when it comes to industrial recruiting, McDuffie County has a larger carrot to dangle.

That's because it's a Tier One county, one of 71 on a list drafted by the Georgia Department of Community Affairs ranking counties from the poorest to the most affluent. Tier One counties are the poorest; Tier Four are the wealthiest.

Beginning Jan. 1, the more jobs a company creates in a Tier One county, the more tax credits it can get.

But that leaves richer areas, such as Columbia County - in the Tier Four category - relying on its good looks to attract industry.

"We continue to get our head beat by South Carolina, McDuffie County and Burke County," said Bill Coleman, a member of Columbia County's Development Authority. "The incentives offered depend on the prosperity of the county, and Columbia County is in the top group as far as prosperity, so we get the least incentives. If you went to Glascock County, I expect they'd give you the world."

In the past legislative session, lawmakers revised the Business Expansion and Support Act jobs tax credit program, increasing the number of economically disadvantaged counties eligible for job tax credits and increasing the amount of credit for each job created.

Effective Jan. 1, a company moving to a Tier One county would be eligible for a credit of $3,500 per employee against its state corporate income tax for five years.

By comparison, a company moving into Columbia County would get a $750 tax credit.

Richmond County is in the second tier, with companies receiving a $2,500-per-job tax credit.But if industrial incentives are the name of the game, then South Carolina is the hands-down winner.

"Georgia's not in the same ballpark with South Carolina as it relates to incentives," said Kevin Shea, senior vice president of economic development for the Augusta Metro Chamber of Commerce. "We've had some companies that have moved from Augusta to South Carolina because of incentives, such as Rest Master Bedding Co. and Menardi."

South Carolina offers similar incentives, such as the job tax credit program, but at a higher level.

As in Georgia, job tax credits depend on the category of the county, giving more to those counties designated as "least developed." Aiken and Edgefield counties fall into that category and can offer $4,500 per year for five years per employee. And if an industry locates in a multicounty industrial park, it is eligible for an additional $1,000 per employee.

South Carolina also has job development credits that allow employers to use payroll withholding taxes based on the wages they pay and the number of employees they have, though they must pay above the county's average wage and provide certain benefits to be eligible, said Fred Humes, director of Aiken County's Economic Development Partnership. Job development credits can be used for capital investments.

Columbia County is feeling the sting of losing to the competition because of incentives.

Blue Dot recently pulled out of Columbia County and moved to McDuffie County for greener pastures and higher job tax credits.

The decision was made after the Columbia County Development Authority refused an offer that was far below market value on industrial land the company wanted.

"We contacted McDuffie County, and they offered a lot of incentives," said Charlie Weser, vice president of operations. "They were very positive and did everything we asked them to do ... The tax incentives for employees was one of the reasons for our decision to move."

Blue Dot, which provides parts for the golf cart industry and coating systems for the industrial and automotive industries, currently has 50 employees, but during its peak season - January through June - it employs almost 100.

The McDuffie County Development Authority sold 16 acres for $3,000 an acre to Two State Construction Co., which built the plant and leases it back to Blue Dot. By comparison, industrial land in Columbia County sells for about $20,000 to $50,000 an acre.

"The other side of that coin is that we represent an extremely good quality of life," said Ron Thigpen, president of the Columbia County Development Authority. "We compete on those assets that we have, and fortunately, a lot of companies are not going to make their final decision based on just economics. They have to look at the total picture."

Reach Melissa Hall at (706) 868-1222, Ext. 113.