There was big news coming out of the governorâ€™s office recently about an agreement reached with Baxter International, an Illinois healthcare company. Gov. Nathan Deal announced that Baxter will open a pharmaceutical manufacturing facility east of Atlanta that puts up to 1,500 people to work. The Baxter project, Deal said, â€œmarks a new era in the growth of our biosciences industry.â€
It also marks a major commitment of state and local tax funds. The Department of Economic Development assembled a package of tax exemptions, tax credits and government grants for Baxter that could reach $136 million. Tax breaks and expenditures by local governments could be worth another $107 million.
If Baxter takes full advantage of the incentives, it potentially could receive in excess of $240 million. That averages out to more than $150,000 per job.
Thatâ€™s in the same territory as the government incentives Kia Motors received for agreeing to open an auto assembly plant in West Point: more than $450 million for 3,000 jobs.
Last February, Deal announced that Caterpillar, an equipment manufacturer, will locate a facility in the Athens area that could create up to 1,400 jobs. The package of incentives offered by state and local government agencies amounted to $77 million, or $55,000 per job.
Iâ€™m glad Kia decided to build that assembly plant in West Point. If a bio-tech company and a heavy equipment manufacturer want to open new facilities here, thatâ€™s good news as well. Honesty and common sense also require that we ask this question: are these business projects worth the money that is being taken from Georgiaâ€™s taxpayers? Are we overpaying here?
Shortly after the Caterpillar announcement was made, Doug Bachtel, a University of Georgia demographer, told Athens reporter Blake Aued: â€œYouâ€™ve really got to be careful. Boy, I tell you, sometimes these things can cost you more than theyâ€™re worth.â€
If they all live up to expectations, the Kia, Baxter and Caterpillar projects will provide a total of just under 6,000 jobs. The total amount of government incentives that have been paid or will be paid to these corporations could exceed $750 million. That is three-quarters of a billion dollars for 6,000 jobs.
The latest labor department figures show that there are 239,200 people in Georgia classified as long-term unemployedâ€”those who have been unable to find a job for more than 27 weeks. The long-term unemployed make up 56 percent of all jobless workers in the state.
A total of 6,000 jobs barely makes a dent in the 239,200 long-term unemployedâ€”but government officials have agreed to pay three-quarters of a billion dollars to create those 6,000 new jobs.
Is that too much money for taxpayers to shell out? That question would be worthy of debate among our elected officials, but there was no debate over it. These deals were all negotiated privately, and the details were not released until the contracts had been signed. If any taxpayers thought we might be paying too much for those projects, they never had the chance to express that opinion before the final offers were made.
These types of deals will become even more secretive under the so-called â€œopen records lawâ€ that Deal recently signed. The new law says all state documents pertaining to financial incentives offered for these projects can be kept secret from the media and everyone else until five days after a final commitment is reached. You not only will have no say in how your tax funds are being spent to lure new business projects to Georgia: you wonâ€™t even be allowed to see the official records pertaining to those deals until after theyâ€™re finalized.
That sounds like a bad deal to me.
Tom Crawford firstname.lastname@example.org
Tom Crawford is editor of The Georgia Report, an Internet news service at gareport.com that reports on government and politics in Georgia.
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