Eggs and Issues: Creating a More Competitive Georgia through Enhanced Infrastructure, a More Attractive Tax Climate and Improved Schools

January 10, 2012

It is a pleasure to be here this morning with so many leaders from across the state.  Every year, this Chamber event brings together business owners, business executives and government officials.  Throughout Georgia’s history, state government and the business community have worked together to grow the economy, and to create a great quality of life for those who call Georgia home. 

As a result of that historic partnership, we live in a state that is the economic engine of the South.  Today, Georgia, by itself, ranks as the 33rd largest economy in the world, ahead of nations such as Austria, South Africa and Argentina. 

We’ve taken advantage of a strategic location on the Southeastern corner of the nation to become a global hub with the fourth largest port in the nation, the most utilized airport in the world and two Class One rail lines. 

The state we call home boasts world class university and technical college systems that now combine to produce almost 80,000 graduates each year.  Georgia is one of only five states with two public universities ranked in the Top 25 by U.S. News and World Report, and this is the only state with two public universities ranked in the Top 5 for return on investment, when graduate salaries are compared to the cost of tuition. 

Georgia has a growing collection of corporate headquarters and a full 14 Fortune 500 companies now call Georgia home.  In our red clay, companies like Coca-Cola and Home Depot have grown from simple ideas to global giants with unsurpassed reputations.

And while Georgia is consistently recognized as one of the best places in America to do business, in these challenging economic times in which jobs are portable, we must do more to compete.  It is my goal to make Georgia the #1 state in which to do business!  

TSPLOST
Georgia has risen to prominence in part by transforming itself into a hub … our state is literally a global crossroads.  Infrastructure is a key building block for economic development and I believe Georgia is now at a historically-critical juncture when it comes to investment in this area.      

To begin, we must make new investment through the regional transportation referenda in July. 

We need new projects to maintain roads and bridges, that left untended, will cost taxpayers far more down the road.  We need to reduce congestion in Metro-Atlanta and remove the drag it places on our economy every time a shipment across town is delayed, and every time a business executive across the nation reads an article discussing how long our commuters spend in traffic.  In the rural areas of our state, we need targeted efforts to open up those local economies.  

The regional project lists are now complete and I want to encourage all of you to take the time to look at those lists and to be involved in this process. 

Through the Regional Transportation Roundtables, communities had the opportunity to shape investment in their area.  The input and feedback was robust and I believe we have a number of projects around the state that are truly deserving of taxpayer dollars. 

This work is imperative to Georgia’s medium- and long-range economic development prospects.  If the slate of projects in your region provides value, I want to ask you to vote and to help get out the word to your friends and family. 

Savannah Harbor Expansion Project
A second infrastructure project of generational significance is the Savannah Harbor Expansion Project, or SHEP.  

It is not a stretch to say that deepening this waterway is a project of national importance.  A deeper Savannah Harbor means greater efficiency for 21,000 U.S. companies, 75 percent of which are headquartered outside of Georgia.  A U.S. Army Corps of Engineers study has shown that SHEP will reduce shipping costs for private companies by at least $100 million a year.  Neither Georgia nor this nation can afford to delay a project that provides customers with a tool that reduces their costs. 

Many of you are familiar with the success of Georgia’s ports.  We have experienced steady, impressive growth at Savannah and it is now the second busiest port for containerized exports in the United States.  In a challenging 2011, exports from Savannah grew a full 12%.  And with Americans increasingly concerned about our nation’s trade imbalance and national debt, the Georgia Ports Authority leadership has built a business mix that is “majority export.” 

We have a long brag sheet, but I am not focused on past successes at this critical juncture.  I am focused on what we must do to position this economic development asset for the future.  With the enlarged Panama Canal coming online in 2014, we need to prepare for the bigger ships heading our way. 

We continue to reach key milestones in the permitting process and, just recently, when visiting the port, U.S. Secretary of Transportation Ray LaHood made very favorable comments about the harbor deepening. 

We are now in a much better position to make real progress on a project that will enable the fastest-growing port in America to continue driving economic activity across Georgia. 

My budget for next year includes $46.7 million in bonds to continue deepening the harbor.  This builds on the more than $136 million already invested for harbor deepening over the last three years.

We are continuing to work towards a Record of Decision and a financial commitment from the federal government.  And, simultaneously, we are continuing work on logistics projects that will support the ports, such as the Jimmy DeLoach parkway. 

A completed harbor expansion means a more competitive Georgia, offering customers greater value and I can assure you that we are doing everything in our power to see this project through to completion. 

Water supply
Lastly, within infrastructure, we are working to ensure every Georgia community has dependable water supplies.  While we continue to await the Army Corps of Engineers decision on diversions from Lake Lanier, we are moving forward with plans to enhance water supply and security around the state. 

We must act to ensure that Georgia is not handicapped down the road by a water shortage or even by continued uncertainty.  

At last year’s Eggs & Issues Breakfast, I announced the launch of the Georgia Water Supply Development Program to assist local governments in developing new sources of water supply. 

We created a task force with the responsibility of identifying how Georgia communities could best increase local supply.  This morning, I want to commend them for the work they have done to develop the approaches that can move the needle on this critical issue.  They have thoroughly evaluated the needs and provided options for diverse situations.  
 
Last year, we took action to get the ball rolling by calling for $300 million of new investment over a four-year period.  My budget for next year proposes $45.7 million for water supply projects, the second installment in that four-year plan. 

Today, the Georgia Environmental Finance Authority will issue solicitation and application forms for the Water Supply Program.  Local governments can now apply for the low-interest loans and state direct investment and we are one step closer to enhanced water security in this state. 

Regarding our long-running battle with our neighbors to the West and South, my team is now negotiating with a more favorable legal backdrop, and we are in a much better position to strike a lasting deal that makes sense for Georgia. 

With our state’s population projected to grow by an additional 4.6 million people over the next two decades, it is imperative that we expand water supply across the state.  Let me restate my priority:  We must create new reservoirs to address Georgia’s long-term water needs!

GCI history and process
… Beyond infrastructure, being competitive today requires an intense focus on business climate and tax policy.  In a global market that is increasingly tight for investment and jobs, we must ensure that Georgia is well positioned in comparison to our peers. 

With that in view, at this event last year, I announced a public-private partnership – the Georgia Competitiveness Initiative.  I asked our economic development Commissioner Chris Cummiskey and Chamber President Chris Clark to co-chair the Initiative.  23 business leaders representing Georgia’s regions and industry sectors were invited to join us as members of the steering committee, and 14 state officials and representatives of both local government and the economic development community served in an ex-officio capacity. 
 
I want to thank so many of you in this room for the role you have played in this initiative. 

It was a very productive effort.  We focused on the key factors that drive growth across all industries and throughout the state:  business climate, education and workforce development, innovation, infrastructure, global commerce, and government efficiency and effectiveness. 

These are the key metrics that site selection consultants use to evaluate locations, and when we get it right in these areas, it means we are beating out our peers in the region and around the globe.

Input process
With the goal of receiving meaningful, broad-based input, our outreach plan included an online survey conducted by the Carl Vinson Institute of Government at the University of Georgia.  This gave us access to a large cross-section of stakeholders and the result was a very comprehensive portrait of what is taking place across the state.  We gained a good understanding of Georgians’ perspectives on what we must do as a state to improve schools and to improve business climate. 

Our outreach also included stakeholder meetings in Georgia’s 12 economic development regions, which brought business, community and government leaders together around one table for productive discussions.
 
In all, the response to the Competitiveness Initiative was overwhelming.  More than 4,000 Georgians – representing large and small businesses … representing rural and urban communities in all twelve economic development regions …  representing every industry that calls our state home – made their voices heard.  

GCI tax reforms
From that extensive process, the Georgia Competitiveness Initiative Task Force developed a set of tax structure proposals that we believe will make Georgia a better place to do business.  We believe this will result in more Georgia companies expanding their footprint here. 

First, we are proposing the elimination of the sales tax on energy used in manufacturing, a move that will align us with many of our top competitors.  Because the sales tax is intended to be a tax on consumption, it should not be applied to business inputs. 

In an age of much higher energy costs, this will impact a large component of manufacturers’ overall cost structure and vastly improve the competitive position of our producers.

Today, in executive offices right here in Georgia, business leaders are making the business decision to expand manufacturing activity and facilities in neighboring states.  Every time they make that decision, we miss out on new investment in our communities and new job opportunities for Georgians. 

… Secondly, we are proposing sales and use tax exemptions for construction materials used in projects of regional significance.

This in an important business climate issue and we need the ability to authorize this exemption when competing for projects creating large numbers of jobs. 

When it comes down to Georgia versus Virginia or Florida, the competition is tight.  It often goes down to the wire … even into overtime … and this is one field goal Georgia can’t afford to miss!   

This policy change will also allow local governing authorities, be it a city or county, to exempt the local sales tax to bring projects to their community.  The result is simple but powerful:  local governments have more options to incentivize investment and job growth.

… A third piece of our plan will be to restructure Georgia’s Job Tax Credits and Quality Jobs Tax Credit program, programs that were created in 1994, at a time when the competitive landscape was far different than the one our businesses operate in today. 

This morning, I am proposing a modernization of our job tax credits that will better incentivize small business growth and help every Georgia community compete with their regional peers. 

The present tax credit system is based on the mistaken notion that Atlanta competes with Rome or even Metter for jobs … it doesn’t.  What we need is a tax credit program that embraces the realities on the ground – that Atlanta is competing with Charlotte and Dallas … that Floyd County is competing with operators just over the state line for a manufacturing facility. 

The current incentives structure has created a situation in which many cities and counties are not competitive against comparable locations in other states. 

These improvements honor the commitment we have made to the rural areas of the state.  We will continue to offer companies rich incentives to locate in our neediest areas.

… Not only are we focused on bringing jobs to Georgia, we are focused on bringing quality jobs to Georgia – jobs that raise the standard of living … jobs that improve the quality of life. 

In 2009, the legislature created the Quality Jobs Tax Credit, rewarding companies that bring in high-paying positions by basing the reward on the salary of the new jobs created.  For existing Georgia operations, and for those considering locating here, they receive these credits if they create jobs that pay wages that are at least 10% higher than the average county wage.

This has proven to be a valuable tool in recruiting companies, but, up to now, companies were required to create 50 or more jobs to qualify for the credits. 

We are proposing to decrease the quality job creation threshold from 50 jobs to 15.  This will reshape the landscape in Georgia for small business owners. 

Most companies now listed in the S&P 500 began with fifty or fewer employees, and we need to make the changes that will ensure more of these small, promising businesses are choosing to call Georgia home.  This will help more small businesses off the ground in those critical early stages.  

Again, to the many of you in this room who played a role in this process, thank you for helping us develop a forward-looking strategy for economic development. 

Education and workforce development
… Today, I have focused on a collection of infrastructure projects and policy changes that we believe are integral in the effort to create a more competitive Georgia.  At the same time, I want to assure you that we remain focused on our number one priority of creating the workforce of tomorrow. 

In fact, during the Competitiveness Initiatives’ regional meetings, the business community consistently stated that education and workforce development was their top priority. 

I share the business community’s belief that Georgia’s long-term prospects for economic development hinge on what is taking place in our classrooms.  For that reason, my State of the State Address this evening will be largely dedicated to education and the investments we are making to improve schools here in Georgia.   

Thank you for your support … thank you for your input on our job creation efforts … and thank you for your partnership in creating a brighter future for this great state. 

As you can tell, the sum total of all these proposals is to fulfill my goal to make Georgia the #1 place to do business.  I know you share that goal.  This is something we can do and with your help we will!