ATLANTA – A rural jobs and tax credits program the state created in 2017 isn’t coming close to paying for itself, a new audit has found.
The Georgia Agribusiness and Rural Jobs Act provides access to capital for small businesses located in rural areas as well as tax credits to companies that invest in rural communities.
From 2018 through last year, 33 businesses in 23 Georgia counties – most in South Georgia – received an average of $3.1 million through the program, according to the Georgia Department of Audits & Accounts. More than half of that money went to small manufacturers.
The program’s annual economic impact during those years ranged from $42.6 million to $60.4 million, according to the Fiscal Research Center at Georgia State University, which partnered with the audits agency on the report.
However, the program is expected to cost $60 million in lost state tax revenue. Given the estimated $580,000 to $630,000 the program is expected to generate in state tax revenue each year, it would take at least 72 years for the state to see a positive payback on its investment in terms of additional tax revenue, the audit concluded.
“This analysis confirms that the program has wholly failed to meet lofty promises,” the Georgia Budget and Policy Institute, an Atlanta-based think tank and frequent critic of the state’s tax credit programs, wrote in response to the audit.
“The findings released today should motivate Georgians to demand greater transparency and accountability for the billions in tax credits the state of Georgia awards each year.
“Wasteful corporate giveaways and special-interest tax breaks not only put great pressure on low- and middle-income Georgians to pay a higher share of this earnings in taxes, but also deprive our state of needed revenue for core programs and services like education and health care.”
The audit was the first conducted under legislation the General Assembly passed this year requiring the state to conduct periodic audits of tax credit initiatives.
“This program clearly does not provide a return on investment from the state,” said Georgia Sen. John Albers, R-Roswell, the bill’s chief sponsor. “I do not believe this is a proper use of state tax dollars.”
The audit also reported that eight other states have launched similar programs – known as certified capital company (CAPCO) investment programs – only to abandon them later. Some states reported significant portions of the funds were not going to qualified businesses, while in other cases, companies received the funds only to go out of business.
The General Assembly considered a CAPCO proposal during this year’s legislative session as part of a broader tax-break package, but the CAPCO component was pulled from the final version of the bill Gov. Brian Kemp signed into law.
This story is available through a news partnership with Capitol Beat News Service, a project of the Georgia Press Educational Foundation.