Legislation narrowly stayed alive Monday that would give tax breaks to the owners of giant yachts who have their vessels retrofitted at a new facility owned by a politically connected Savannah company.
The Senate Finance Committee voted 6-5 to approve House Bill 125, with Senate Finance Chairman Chuck Hufstetler, R-Rome, breaking a tie vote. Some of Hufstetler's fellow Republicans on the committee, including Senate Majority Bill Cowert, R-Athens, voted against it, making its chances of winning final passage iffy.
Under the legislation by state Rep. Ron Stephens, R-Savannah, a boat owner would have to spend more than $500,000 on a retrofit, repair or maintenance job before getting any break on sales taxes on parts, engines or equipment.
While Stephens said there are boat repair businesses in Savannah, none can do a big retrofit, repair or maintenance jobs on massive yachts. The tax break is designed to help spur a big-boat retrofit business, and he said since such work isn’t currently being done in Georgia, the tax break wouldn’t cut into any revenue the state currently receives.
The bill passed the House last month.
Stephens said the owner of the Savannah Yachting Center — Colonial Group — is planning to invest $50 million to $60 million into the big-boat business and is promising to create hundreds of jobs.
Stephens said it will be down the Savannah River from a massive luxury hotel project that lawmakers approved a multimillion-dollar tax credit for in 2015.
Colonial Group operates a collection of shipping, and oil and gas businesses, including Enmark gas and convenience stores. Forbes Magazine last year ranked it the 146th-largest private company in the country, with $3 billion in revenue the previous year.
The company and its president, Robert Demere, have been active in state politics, donating more than $33,000 to the campaigns of lawmakers over the past two years, including $2,500 to House Speaker David Ralston, R-Blue Ridge, and $1,500 to Senate President Pro Tem David Shafer, R-Duluth.
Demere has donated $6,500 to the campaigns of Lt. Gov. Casey Cagle, the Senate’s president.
Ten lobbyists are registered to work for the company this session, including former Georgia Senate leader and gubernatorial candidate Eric Johnson of Savannah.
Demere, who served on Gov. Sonny Perdue's Energy Policy Council, has been vocal in opposing construction of a petroleum pipeline along the Savannah River and coastal Georgia by energy giant Kinder Morgan. Lawmakers passed a temporary pipeline moratorium last session and are working on another pipeline bill this year.
Stephens said the tax break for retrofits of the massive yachts would give Georgia businesses the chance to perform work now done in other states, such as Florida.
“This is all about making sure our businesses are competitive,” Stephens said. Because the state currently doesn’t have a big-boat retrofitting business, “Georgia has nothing to lose,” he added.
State Sen. Bill Heath, R-Bremen, a member of the Senate Finance Committee, has expressed concern that the tax break would only be part of the state's investment. Stephens is a champion of such bills, including the tax break for the luxury hotel complex that passed in 2015, and he promotes expanded tax breaks pretty much every legislative session.
State Sen. Nan Orrock, D-Atlanta, another member of the committee, asked Stephens, "Have you considered the optics to this bill?"
Even if the tax break helps spur a new business, Orrock said, the public “will see that Georgia is giving tax breaks to people with $25 million yachts.”
“They,” Orrock said, “will say, ‘Here the rich folks are walking away with a tax cut.’ “
The bill now moves to the Senate Rules Committee, which will decide whether it goes to the full chamber for a vote.
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