Rural jobs bill meets opposition

ATLANTA – A complex plan to connect investors with rural businesses striving to grow has run into resistance from some lawmakers wary of the potential cost to the state.

The proposal, sponsored by Rep. Jason Shaw, R-Lakeland, would offer a tax break to companies willing to take a chance on agribusinesses and other rural employers looking to expand and hire more folks.

Shaw’s bill, dubbed the Georgia Agribusiness and Rural Jobs Act, would create a $100 million pool of money that would be invested in small businesses located in counties with less than 50,000 residents within a two-year span.

The investors – likely to be institutions such as insurance companies or corporations – could then claim up to $60 million in tax credits over four years.

But state budget analysts concluded the hit to the state budget would be less painful once the new jobs translate into new state revenue. The program, they found, would likely cost the state as much as $12.5 million in one year once it matures.

“These loans would be underwritten the way loans are supposed to be underwritten, where it takes the state out of trying to pick winners and losers and puts it in the hands of the professional people that know how to do that and who work in that credit market every day,” Shaw said Friday.

Similar proposals have been contemplated in Georgia before, including another bill from Shaw that was vetoed in 2015 after being significantly altered in the Senate.

This time, the measure came to a grinding halt in a Senate committee, even after sailing through the House earlier this month. Sen. Bruce Thompson, R-White, asked to table it this week for “further study.”

But Shaw quickly revived his plan on Thursday, just one day after it stalled.

The proposal was tacked onto a Senate bill, sponsored by Sen. Larry Walker, R-Perry, that is awaiting action in the House – a common maneuver in the final days of the legislative session.

Walker’s bill waives a tax for corporations with a net worth less than $100,000, costing the state $4.3 million in the lost revenue.

But Walker said Friday that he’s worried that the potential cost of Shaw’s measure endangers his bill and said he’ll push to have it extracted.

“It affects the state budget, and it takes money to run the state,” Walker said.

Shaw has championed the proposal as one piece of a solution to help address the economic woes of rural Georgia, which continues to experience job losses and dwindling populations.

Action, he says, is needed to reverse those trends.

“The majority of Georgia is rural, and those parts of Georgia are struggling,” Shaw said. “It takes answers. It takes solutions. This is just one of them.”

His proposal is one of several bills pitched this year that target the rural communities that have not experienced the economic recovery seen most notably in metro Atlanta. Like many of the others, his bill would require the state to chip in.

“This creates a public-private answer to trying to funnel capital investments in those areas,” Shaw told.

Shaw said he’s piggybacking on work done in Pennsylvania, where lawmakers created a similar program last year. The Keystone State, he noted, has developed a rural policy center focused on finding solutions.

But Wesley Tharpe, research director with the left-leaning Georgia Budget and Policy Institute, said Shaw’s plan is based on a flawed concept that has a “pretty poor track record” elsewhere.

Those earlier iterations, Tharpe said, have been known CAPCO and New Markets Tax Credits programs.

“It’s evolved over the years, but it’s essentially creating a very complicated, opaque program that pumps a lot of state dollars into companies promising jobs and growth without a lot of ways to know if we see that return on investment,” Tharpe said.

Shaw described his proposal as a “tightened up” version that limits how much money fund managers can keep for their expenses to 2 percent, gives the state a share of the investment returns and allows the state to reclaim the tax credits if the promised jobs are not created.

Jill Nolin covers the Georgia Statehouse for CNHI’s newspapers and websites. Reach her at jnolin@cnhi.com.