On Tuesday, April 16, nearly 150 clients and friends of King & Spalding joined partner Bill Holby in both the Atlanta office and online via Webinar to hear State Representative Edward Lindsey (R-Atlanta) and State Senator Josh McKoon (R-Columbus) for the first in a continuing series of programs highlighting economic development in Georgia. For 60 minutes, the two leaders from the Georgia General Assembly recapped some of the key issues that affect Georgia, including some of the job creation initiatives from the 2013 Legislative Session as well as a discussion on tax reform and a look ahead at the 2014 Session.
Rep. Lindsey focused on the state's struggles to once again balance the budget on tight tax revenues. Lindsey noted that in 2008, the State Budget was $21.2 billion and Georgia was ranked 49th in per capita spending. Just one year later, the State Budget was only $18.9 billion in 2009 and fell further to $17.1 billion in 2010. With the economy improving, the budget climbed back to $19.3 billion in 2012 and rose a little higher to $19.9 billion for 2013.
Sen. McKoon turned to the issue of ethics reform in Georgia. Two changes made during the past session included a $75 limit on gifts by lobbyists to members of the General Assembly, and provisions for greater transparency regarding campaign contributions. This transparency is to be achieved through a new reporting schedule that will require the disclosure of contributions collected during the first two weeks in January before the start of the legislative session. The legislation also restored rulemaking authority to the Georgia Transparency and Campaign Finance Commission.
Moving on to economic development, both elected officials were in agreement on some of the areas in which Georgia needs to improve if our State is to remain economically competitive. Lindsey highlighted five criteria that companies look at when deciding where to do business -- infrastructure, natural resources, education, tax policy, and an overall business-friendly environment. "On some of these we get an 'incomplete,'" Lindsey said, "because we still have some work to do."
Turning to infrastructure, Lindsey said the legislature is still trying to decide on a "Plan B" after voters in the Atlanta area, and many others around the state, failed to pass the regional Transportation Special Purpose Local Option Sales Tax ("TSPLOST") to fund infrastructure improvements. One idea now under consideration in the legislature would allow counties to come together more easily to collaborate on local projects.
Another area that the legislature has moved forward on is the deepening of the Port of Savannah. "It cannot be overstated how important that is going to be for the overall economic development for Georgia," Lindsey said. With the deepening of the Panama Canal set to be complete no later than 2015, Georgia needs to be prepared to dock the larger cargo ships that will soon be passing through the Panama Canal.
To improve Georgia's water system, Lindsey's House Bill 199 would allow additional bonding authority for local water systems to create water grids to plug leaks in the water system and to identify more effectively where local authorities are wasting water.
For McKoon, looking at the economic future for Georgia means being in front of the curve in high-tech opportunities. He outlined a need to change Georgia's legal framework to match states like California and Nevada, who are leading the way in research into automated vehicles. He also discussed the growing private space industry and how elected officials and investors on the Georgia coast are looking at capitalizing on that growing field by bringing a space port to Camden County.
A barrier to economic growth identified by McKoon is in our educational system, which recently has been plagued by governance scandals in DeKalb, the City of Atlanta and elsewhere. McKoon signed on as a Senate sponsor of Lindsey's "Parent Trigger" legislation, which allows parents to simplify the process of converting an existing failing school into a charter school if more than one-half of student households petition for the change.
Another area where Georgia has fallen behind, but is rapidly catching up, is in start-up funding for new companies, a policy that has been very successful in helping other states attract entrepreneurs and new business development. "We are not tapping into [our research universities] the way we should when it comes to assisting start-up companies, particularly in high-tech fields," said Lindsey.
Looking forward to tax reform, Lindsey sees challenges in making Georgia's tax code more business friendly. "There is always someone who has a vested interest in not changing [the status quo]," said Lindsey. Most of the tax reform for the 2013 Session was devoted to making small tweaks in the tax code -- closing a loop-hole in the new sales tax on cars (which has replaced the annual ad valorem tax on new vehicles), and continuing a tax break on airplane parts as it spurs job growth in Georgia by attracting out-of-state airplane owners to have repairs made here.
"When it comes to tax reform, we have to begin by just acknowledging we must develop a plan to get to zero [percent income tax]. Because if we don't do that, we are going to be left on an island. Both of the Carolinas have measures under consideration to go to zero," said McKoon, adding, "There is no question in my mind, certainly from the business folks I talk to in my district, there is no single thing that we can do for economic development that would be greater than eliminating the income tax."
Looking ahead to 2014, Lindsey reiterated the challenges of both transportation and water, along with a myriad of issues facing education, that will be priorities in the next session. McKoon voiced his concerns about the long term viability for HOPE, and discussed the need to control costs and put downward pressure on rising tuition rates. Another issue that will face the legislature in 2014 is Medicaid and the State Employee Health Plan, both of which will face pressures with the implementation of the federal Affordable Care Act.
Before the program concluded, Bill Holby asked Rep. Lindsey about his recent announcement to join the race for the 11th Congressional District seat being vacated by Phil Gingrey, who is stepping down to run for the United States Senate.
Anyone who wishes to view the program again, or who might have missed it the first time, can access it here.