Incentives used to lure a new pharmaceutical manufacturing plant and its 1,500 promised jobs to a site 40 miles east of Atlanta could exceed $210 million.
When Gov. Nathan Deal announced last week that Georgia had landed the high-tech Baxter International factory, the state Department of Economic Development estimated the state would give the company $80 million in incentives.
Alison Tyrer, the department's spokeswoman, said she based the initial estimate on incentives that were specially crafted for Baxter and job tax credits. She did not include tax breaks and incentives every company can take advantage of, such as Baxter’s estimated $1.3 million in energy sales tax exemptions, or items such as $14 million training facility the state will build on Baxter's site near Covington, which the state will own and potentially use for other training.
But the biggest chunk not included in the initial estimate: more than $107 million in local tax breaks and exemptions.
The Atlanta-Journal Constitution filed an open records request to get the full agreement. Even county officials in the area around the plant site were unaware of the full cost.
"That takes my breath away," said Morgan County Commission Chair Ellen Warren on adding up the state's cost.
The state dollar figures could rise depending on how many jobs Baxter creates, according to documents the AJC obtained..
For instance, Georgia’s $103 million cost is based on a low estimate of Baxter using $27.2 million of sales tax exemptions. If Baxter spends more, that could rise to $60.4 million and drive the state’s total to $136.8 million.
Baxter, whose plant near Covington is expected to employ 1,500 people when it is operational in 2018, is one of the state's biggest recruitment efforts. But it's not the biggest. South Korean automaker Kia got incentives worth more than $400 million to put a plant in West Point.
Baxter also isn't the first corporate recruit that was more expensive than first announced. When NCR decided to move its headquarters to Duluth and open a plant in Columbus, the state initially pegged incentives at $60 million. Documents later showed the total package to be worth $109 million.
Warren said a meeting is scheduled for next week with the members of the Joint Development Authority of Jasper, Morgan, Newton, and Walton counties to talk about details and local numbers. Each county is responsible for a part of the incentives.
Mack Bohlen, a member of the authority, said the incentives were necessary to secure the region's future.
"If you take 50 percent of zero, what do you got? It's zero," he said. "But if you put something up there and give an abatement, somewhere down the line when you put those jobs on the line and people start getting paid, those checks are going to be spent in those counties. Now you may not have a tax digest for a few years, but those checks are going to be spent and that is money in local coffers."
"I hate that that is what it's come to. But if you are not playing the game, you are never going to have jobs and a tax base or industry," Bohlen said.
Warren said the region has been hit hard economically, and the jobs are more than welcome, they are needed.
"That's really good news and will be a benefit," she said.
The local tax abatements gradually phase out over 15 years or so.
Pat Wilson, chief operating officer for the state Department of Economic Development said, "If you go east of Atlanta and ask anybody who is looking for a job if it was a good deal I think you are going to get a strong affirmative."
Tyrer said average salaries for the type of jobs Baxter will offer at the plant, which will make medical supplies and therapies from plasma, are $55,000 to $60,000 a year. The plant will cost at least $830 million to build, and that could rise to more than $1 billion.
Brian Robinson, the spokesman for Gov. Nathan Deal, said the effects of the new plant will be significant and long-term.
“Georgia confronts an intensely competitive environment for deals of this magnitude because the economic impact is so immense," he said.
Luring the Kia car plant to West Point transformed that area by attracting other jobs, he said. Support companies such as car parts suppliers have moved nearby.
"Just as Kia transformed its region of west Georgia and had a huge ripple effect in other business, so too will Baxter along this I-20 corridor," Robinson said.
“Baxter will serve as a firm and important foundation that will bring in more high-paying jobs,” he said.
The state and the Joint Development Authority for the four counties worked for more than a year negotiating with the pharmaceutical giant, based in Illinois.
Brent Lane, director of the University of North Carolina's Center for Competitive Economies, said the strength of the Baxter plant will be that it is exporting pricey products that will draw new money into the Georgia economy.
But it is difficult to know the final effect of $200-plus million in incentives, he said, because the state does not track them long-term.
"And so the company gets the benefits without anyone doing due diligence and figuring out if it is having the desired economic effects," Lane said.
Alan Essig, the executive director of the Georgia Budget and Policy Institute, said, "Adding 1,500 jobs is obvious a positive, but throughout the state we may be losing more than that because of lack of education and infrastructure."
"We get big headlines for a couple of thousand jobs, but how many jobs are we losing by plants and small businesses going out of business?"
Estimated incentives for Baxter International
From Georgia
$13.8 million, Infrastructure grant
$28.1 million, Quality jobs tax credit
$4.7 million, Jobs tax credit
$27.2 to $60.5 million, Sales tax exemption on machinery and equipment
$1.35 million, Energy sales tax exemption
$2.5 million Construction materials tax exemption
$14 million, New training facility built on Baxter site
$10.4 million, Quick Start state job training program
$150,000, Ga. Dept of Labor recruitment center
$1.47 million, Georgia Works Ready training
Estimated Incentives from the Walton, Newton, Jasper and Morgan counties and their joint development authority
$94.1 million, For 15 years of real and personal property tax abatements
$5.9 million, Grant for a new waste-water treatment plant
$6.5 million For 160-acre site which Baxter can purchase for $1 after 15 years
$650,000, Waived construction, inspection fees
$613,400, Waived water and sewer fees
$100,000, Road improvements
$60,000, Use of Authority offices
unknown, Freeport tax exemptions on materials and finished goods
unknown, Cost of securing industrial development bonds
Source: Economic Development Agreement Between Baxter Healthcare Corporation and the State of Georgia
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