‘It’s how we compete’: Georgia business recruiters plead to keep tax breaks

“Those tools that you use every day are not giveaways,” Chris Clark, the head of Georgia Chamber of Commerce, told a 400-person crowd at a State of Economic Development event.

“It’s how we compete,” he said.

Credit: Courtesy of Paul Ward for the Georgia Chamber

Credit: Courtesy of Paul Ward for the Georgia Chamber

Tension over economic development incentives has risen in recent years, especially as affordability dominates political discourse.

Conservative lawmakers have peeled through the state tax code looking for fat to trim, including some evaluating ways to eliminate the state’s income tax. Their Democratic colleagues and government watchdogs have focused on tax break programs they say benefit only favored industries, such as Georgia’s film sector and Big Tech’s data centers.

Good Jobs First, a left-leaning incentive watchdog, lists Georgia among several states with “tax code provisions and other practices that result in significant revenue loss,” which it argues results in less public service funding.

Credit: HYOSUB SHIN / AJC

Credit: HYOSUB SHIN / AJC

A deluge of bills to revoke or re-evaluate Georgia’s incentives passed through the Capitol’s hoppers this Legislative session, although many were dead on arrival. One of the few that passed both state houses would revoke sales tax exemptions for data centers, an incentive projected by state auditors to eclipse $2.5 billion this year.

The prospect of potentially losing well-worn tools used to recruit business has concerned some development authorities, which are government agencies with the power to offer property tax breaks and other incentives to companies and developers.

“Don’t put us at a disadvantage,” said Niki Vanderslice, president and CEO of the Fayette County Development Authority. “Don’t change the rules of the game in the middle of it when companies have made decisions.”

Credit: Courtesy of Paul Ward for the Georgia Chamber

Credit: Courtesy of Paul Ward for the Georgia Chamber

Stiff competition

Economic development is often described as a cutthroat game.

Georgia’s gain is said to be another state’s loss, which is why economic development officials say financial incentives are able to act as a final sweetener to separate the competition. It also leads many economists to question whether it’s a game worth playing if the cost of the incentives outweighs the benefit.

Clark said a diversified economic pipeline acts as an insulator during shaky economic times, arguing that’s an aspect of business recruitment that’s not captured in dollars and cents.

“Georgia companies are still stressed out right now over trade tensions, the tariff issues that we see and consumer spending is changing,” he said. “ … There will be a time where we have a recession again.”

Other states also have their own fleet of corporate tax breaks, including many that mirror Georgia programs that are being evaluated. Lauren Curry, chief of staff for Gov. Brian Kemp, said imitation is flattering, but it poses a threat to Georgia’s competitive advantage.

“We cannot rest on our laurels. The markets change, we have to adapt,” she said. “People have found the Southeast. We’re all doing great, but they’re also our competitors.”

She added that rural Georgia is often a beneficiary of state-backed economic development recruitment. During the Kemp administration, nearly two-thirds of all new jobs announced were outside metro Atlanta. About 75% of all new investment — such as Hyundai’s $7.6 billion Metaplant near Savannah — were also outside the Atlanta area.

Jason Dunn, executive director of Fitzgerald-Ben Hill Economic Development Authority, said rural counties like his in South Georgia have been devastated by agricultural and manufacturing changes over the decades.

From 2000 to the fallout of the Great Recession, Ben Hill County lost half its industrial production by gross domestic product, according to U.S. Bureau of Economic Analysis data. Only recently did the county’s industrial GDP recover.

“It took 25 years to get back, but it would not be done without incentives,” he said.

‘Looking long-term’

Not everyone is thrilled with Georgia’s economic development machine.

Zoning meetings often get flooded by opponents to specific projects, whether they be apartments in affluent areas or factories in rural enclaves. Data centers have become the poster child for widespread grassroots opposition campaigns, typically featuring crowds wearing matching red shirts who raise concerns about electricity usage, water demands and noise.

Clark warned those sentiments are gaining traction and could embolden lawmakers to make broader changes.

“You’re seeing people show up in red T-shirts that are against everything, and they’ve got the same playbook,” Clark said. “ … And unfortunately, over the last couple years, we’ve seen some of that creep in across the street at the General Assembly.”

Credit: Miguel Martinez-Jimenez

Credit: Miguel Martinez-Jimenez

Fayette County’s largest project is a series of data centers by QTS, which Vanderslice helped recruit with a tax break. She said the computing campus, which is estimated to be at least a $10 billion investment, is a long-term investment in digital infrastructure that she believes will set up the county for decades of further job growth.

“You need to be looking long-term, not just with the (red) shirts that show up in the room right now,” she said.

Credit: Courtesy of Microsoft

Credit: Courtesy of Microsoft

Critics question whether many of these projects would come to Georgia even without targeted incentives, especially in red-hot industries like data centers. But economic development leaders said it’s a dangerous game to risk Georgia’s streak of record-breaking growth.

“We’re in the middle of some amazing times,” Pat Wilson, the state’s top economic development official, said in his speech last week.

“But we’ve got a responsibility to keep it that way.”