Georgia State of the State: Gov. Deal Touts “Orchards of Opportunity”

Georgia Governor Nathan Deal unveiled an ambitious and packed legislative agenda for the coming year in his final State of the State Address on January 11. The governor touted the “orchards of opportunity” planted throughout his tenure while calling for more successes in his final year.

Governor Deal celebrated the 675,000 new jobs created by Georgia’s private sector over the last seven years, a period in which the state’s unemployment rate plunged from 10.4 percent to just 4.3 percent.

Unfortunately, the governor bestowed undue credit for these successes on the special favors doled out by the state’s Department of Economic Development. He cited the 377 business expansions statewide generated by some $6.33 billion in investments.

In particular, the governor singled out the state’s film production industry which generated $9.5 billion in the past year alone, a huge growth over $241 million just 10 years ago. He further lauded the industry for being responsible for more than 92,000 jobs in the state, with average salaries around $84,000. Targeted tax breaks, subsidies, or preferential treatment incentivized many of these investments. The Peach State has a long history of favoring certain industries, like filmmaking, through tax preferences. This past year, lawmakers expanded this tax policy to the music and recording industry, offering credits and incentives for locating shops in the state. Sadly, these tax incentives come at a high cost.

By giving special deals to a select few, tax rates remain higher for everyone else. Guaranteeing big success to a few favored entities stunts broader economic growth. Policymakers could attain more sustainable, higher growth by broadening the tax base while lowering the overall rates.

Shifting the discussion to education, Governor Deal boasted about the increase of $3.6 billion in education spending over his tenure, for a total of roughly $14 billion by the time he leaves office. He called for investing more in the state’s K-12 programs to improve a “chronically failing” system. Unfortunately, more money has repeatedly failed to get better results. Education funding should be tied to academic results and teacher performance.

Looking to higher education, Governor Deal applauded the expanded certificates and degrees available through the 22 campuses of the Technical College System of Georgia (TCSG), which are helping produce people equipped for open jobs in Georgia and reduce the skills gap noted by many companies in the state. To build on these successes, the governor announced an additional $1 million in his budget proposal to expand a TCSG welding program and establish a deputy commissioner position to help best allocate TCSG’s resources to help economic development.

Reflecting on past accomplishments Deal thanked lawmakers for embarking early in his administration on an overhaul to the state’s fuel tax to help fund his 10-year, $11 billion transportation investment plan.

Over the past decade, Georgia’s economic outlook has declined from top 10 in the nation to 17th, according the Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index. Changes in the tax and fiscal system remain uncompleted. The top marginal income tax rate remains slightly higher than the national median, workers’ compensation costs are stuck at 24th nationally, and the tort system needs reform. The state’s economic climate certainly is better than average, but to enhance the competitive edge, complacency is not an option.

Since the Governor’s address, lawmakers heeded the examples of states like North Carolina, Tennessee, and Florida, and cut income taxes for every hardworking taxpayer. The pro-growth nature of the cuts remains to be seen, but if the record of other states enacting fiscally prudent tax reform is any indication, substantial improvements in economic output are just around the corner.