Deal-O-Meter
Create a program to spur business development
Create Certified Capital Company (CAPCO) program to fuel research and development
Republican Gov. Nathan Deal is preparing for the fanfare that will kick off his second term in office. So we thought this would be a good time to take a look back at some of his campaign promises from the first.
Deal built his first campaign for governor on a few simple themes. One of those was a promise to create more jobs in a state hit harder than most by the Great Recession and, particularly, the housing market collapse.
During the 2010 campaign, Deal vowed to create programs to spur business development. Specifically, he said he wanted to establish certified capital companies, also known as CAPCOs, in Georgia.
The concept: Insurance companies operating in Georgia would receive state tax credits to invest in businesses, CAPCOs, that would then invest in small businesses and startups. The hope was these businesses would create jobs.
State lawmakers actually approved a CAPCO program in 2002. But they repealed it two years later before $75 million in planned tax credits could be doled out. Lawmakers said their decision was based on budget concerns and worries about the program’s potential effectiveness.
CAPCO programs were controversial. At least a dozen states — including North Carolina, South Carolina and Nevada — had rejected calls to create such programs by 2012.
Several others — including Florida and Colorado — that previously experimented with CAPCOs had by then taken steps to limit or eliminate their programs.
In Georgia, a CAPCO plan calling for $125 million in tax breaks was revived in 2011 but died on the last day of the legislative session.
As an alternative, in 2013, the General Assembly passed and Deal signed legislation creating a program called Invest Georgia.
This program will “serve similar aims,” Brian Robinson, Deal’s spokesman told PolitiFact on Tuesday.
“It will provide money for startups and such,” he said in an email.
Wesley Tharpe, a policy analyst with the left-leaning Georgia Budget & Policy Institute, said Invest Georgia is “better designed than CAPCO, which he called a “flawed model” relying on “expensive tax credits.”
Invest Georgia is based on “some promising policies from other states, Tharpe said.
It is set up to be funded through the annual budget process — rather than through tax credits, Tharpe said.
That should make the program “more accountable to both lawmakers and the public,” he said.
The University System has set aside $10 million in its current year’s budget to get the program off the ground and the longterm objective is to have $100 million within fiv eyears to invest in starting or expanding companies.
Deal promised to set up a program to spur economic development, specifically through a CAPCO program. But there were reservations about this investment of taxpayer money.
Some normally skeptical voices said the approved alternative, Invest Georgia, could achieve the same goal with greater accountability to legislators and the public.
For that reason, we rate this Promise Kept.
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