Rural Georgia lawmakers pour hope into investment plan many question

State Rep. Jason Shaw, R-Lakeland, tears up paper to throw when the final gavel fell on the 2017 General Assembly session Friday morning. The photo was taken shortly after the Senate gave final approval to Shaw’s Georgia Agribusiness and Rural Jobs Act. BOB ANDRES /BANDRES@AJC.COM

State Rep. Jason Shaw, R-Lakeland, tears up paper to throw when the final gavel fell on the 2017 General Assembly session Friday morning. The photo was taken shortly after the Senate gave final approval to Shaw’s Georgia Agribusiness and Rural Jobs Act. BOB ANDRES /BANDRES@AJC.COM

One top Georgia senator called it a “bad investment scheme” that would pay well-connected national capital companies millions of dollars even if their jobs program created no jobs.

Another said the idea had proved a failure in state after state, costing taxpayers big money.

But rural lawmakers seeking almost any legislation that might help small-town Georgia, urged on by a team of top lobbyists for a few national capital companies who could stand to benefit, narrowly won approval in the final moments of the 2017 session for a plan to provide tax credits to companies that invest in rural businesses.

"Rural Georgia has been left behind," said state Sen. Larry Walker Jr., R-Perry. "We are in a desperate situation."

On a 29-23 vote at 11:25 p.m., the Senate backed Senate Bill 133, a complex plan that would provide $60 million in tax credits to companies that invest in rural Georgia businesses. The original version of the Georgia Agribusiness and Rural Jobs Act by state Rep. Jason Shaw, R-Lakeland, had been defeated in the Senate Finance Committee, but House members tacked it onto a noncontroversial Senate bill sponsored by a friendly lawmaker, Walker. It failed on the first vote Thursday night but won final passage on a revote.

A similar mulilayered lending program, then known as CAPCO, stalled at the end of the 2011 session, and a rewritten version called the "New Markets" program was approved in the final hours of the 2015 session, only to be vetoed by Gov. Nathan Deal.

The idea has been around, off and on, for decades, often sold by the same few capital companies. While the companies point to successes in creating jobs, auditors and researchers in several states have said the programs didn’t create as many jobs or as much state revenue as promised and recommended they be shut down.

In most cases, the capital firms direct cash to businesses using money loaned to the capital firms from companies that are granted the tax credits, often insurance companies. Generally, the capital firms will earn management fees and in some cases much of the principal, interest and/or profits.

The investment is important, Shaw said, because many rural businesses are starved for capital to help them grow.

Some of the same lobbyists who pushed the 2011 CAPCO bill and “Free Markets” in 2015 were back at the statehouse working to pass what became SB 133. Supporters of the program stood outside the Senate, talking to lawmakers as they exited the chamber, late into the night Thursday.

Among those representing the capital companies was Pete Robinson, a former Senate leader and fundraiser for Deal. Robinson has lobbied for one of the main companies involved in the issue since the 2011 bill. Another was Matthew Ralston, son of House Speaker David Ralston,R-Blue Ridge. A third was Jeremy Collins, a former chief of staff to Senate President Pro Tem David Shafer, R-Duluth, who backed the bill.

The notion that parts of rural Georgia need big help is no secret. Many counties have been losing or at least not gaining population for decades. The unemployment rates, even in good times, in some small Georgia counties are at least a couple of percentage points higher than in Atlanta.

Ralston, who has been mentioned as a possible candidate for governor in 2018, has made a priority of finding ways to help rural Georgia.

The Senate is also full of possible candidates for statewide office in 2018, and some of them supported the bill. Shafer and state Sen. Butch Miller, R-Gainesville, who was rounding up votes for the SB 133, are likely candidates for lieutenant governor when the chamber's president, Lt. Gov. Casey Cagle, is expected to run for governor. State Sen. Michael Williams, R-Cumming, another potential statewide candidate in 2018, opposed it.

During debate on the bill late Thursday night, Walker talked about how rural lawmakers have voted in recent years for infrastructure projects in Atlanta. Those kinds of votes don’t necessarily help rural lawmakers with their constituents, and the message was clear: time for urban and suburban lawmakers to reciprocate.

“The state invests throughout the state in economic development through OneGeorgia,” Walker said, referring to a program that provides grants and loans. “We need some help out in the hinterland. This is a good bill for rural Georgia.”

But state Sen. Nan Orrock, D-Atlanta, said programs like the one in SB 133 have a spotty track record and wind up making big money for capital investment companies. State Sen. Elena Parent, D-Atlanta, said the companies would wind up making good money even if no jobs are actually created.

Walker responded that there would be financial penalties if the funds didn’t create the jobs they said they would, and he said the program would “pay for itself” through increased state tax revenue within 10 years.

The strongest condemnation came from Senate Finance Chairman Chuck Hufstetler, R-Rome, whose committee voted down the proposal, only to see it spring back to life.

“This program doesn’t promise any jobs, this money doesn’t even have to stay in this state,” he said. “You could create no jobs and keep 90 percent of the money.

“This is a bad investment scheme. This is not going to create jobs in rural Georgia. They will waive whatever sparkle they can to make you think this is a good bill.”

Deal administration officials declined to comment on the legislation. The governor has 40 days after the session ends to sign or veto legislation.


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