The AJC published a two-part series entitled "Buying Jobs" in the May 5th and 6th editions. Their reporters examined project reports dating back to 2002, including some 164 paper files containing thousands of pages of materials compiled by the Georgia Department of Community Affairs. The research was limited to "closed" files with DCA, in which state officials had completed their review of whether companies who received economic incentives had complied with their requirements under agreements related to such incentives. The AJC also interviewed key economic development officials including Chris Cummiskey, Commissioner of the Georgia Department of Economic Development, and Brian Williamson, Deputy Commissioner for Community and Development & Finance of DCA.
The first part of the series focused on Georgia's approach to providing economic incentives in exchange for performance measures that generally consist of employment and capital investment goals in connection with each prospective project. The AJC calculated that, since 2002, Georgia's $160 million in state grants documented in the files maintained by DCA helped create 22,560 jobs, for an average cost of $7,101 per job. When factoring in property tax abatements and other subsidies, the AJC concluded that the level of public assistance per job could be substantially higher. The AJC highlighted the 10 companies that received the largest combined EDGE and REBA grants and analyzed the jobs created versus the jobs promised for these companies (Note: most grant agreements require 70% or 80% compliance with stated goals before reimbursement of state grants is required). The AJC chart is recreated below:
Click here to see table.
Part two of the series focused on whether Georgia was conducting sufficient due diligence with respect to the companies that receive grant money. The article examined grants pledged, but never given, to a proposed manufacturing plant in Columbus, Georgia that was downsized to a distribution facility after the prospect was not awarded a $1 billion dollar federal contract for a new assault rifle; a grant pledged to a project in Soperton that proposed to convert timber into ethanol and was labeled by Federal officials as a high-risk venture; and a grant for a conversion van manufacturing facility in South Georgia to be used by a company with questionable financial viability. The AJC also examined Georgia's strategies for holding companies accountable for achieving jobs and investment goals, and for recouping grant awards from companies that do not.
The investigation echoed a common theme in such analyses, suggesting that Georgia's efforts to generate economic development may not be an efficient use of state funds. The articles cited a number of sources, including economists and organizations like Good Jobs First (which is critical of economic incentives), who were skeptical about the value of the jobs created (and ancillary benefits to the community) as compared with the amount of grant funding received. The article also challenged whether Georgia, which is rated by the Center for Regional Economic Competiveness as among the most generous states in offering combined tax breaks and grants, has adequate metrics in place for assessing the effectiveness of that investment, citing an April 2012 Pew Charitable Trusts report on that subject.
Those who have worked in the economic incentives arena for some time are not surprised that the efficiency of grant programs and other public sponsorships continues to be challenged, and that adequate tools for measurement remain elusive. However, organizations like the Carl Vinson Institute of Government at the University of Georgia, as well as a number of others, continue to refine tools that are available to state and local officials to match public support with private job creation and investment goals, so the "state of the art" continues to improve. While Georgians would prefer to compete based exclusively upon the resources of our state and the favorable business environment that exists here, these other economic development strategies will remain an integral part of Georgia's efforts to compete with communities in our region and, indeed, across the country, if we are to be successful in the recruitment, retention and expansion of our business community.