February 28 , 2006

Tax relief needed to save Georgia manufacturing jobs

By Senator Tim Golden

According to the Selig Center for Economic Growth at the University of Georgia’s Terry College of Business, our state has lost more than 130,000 manufacturing jobs since 1998. Despite promises from the current administration that things are getting better, Georgia has continued to suffer more manufacturing employment losses every single year: 14,700 in 2003, 6,800 more in 2004, 6,700 more in 2005 – and 6,600 projected for this year.

The closing of the General Motors and Ford plants in metro Atlanta should leave no doubt that the decline will continue until someone under the Gold Dome wakes up.

I salute the hard work and dedication of significant state resources on the part of Craig Lesser and the Department of Economic Development, trying to attract new industry and tourism to Georgia. And today’s news that LaGrange is the front-runner for a new Kia automobile plant is certainly encouraging.

But wouldn’t it also make sense to direct at least an equal amount of effort to reverse the steep decline in the number of jobs that are already here, so that we’re not constantly playing catch-up?

One meaningful step the state can take immediately is for the legislature to pass and the governor to sign House Bill 209, which would provide tax relief to Georgia manufacturers in the form of a sales tax exemption on the cost of natural gas, artificial gas or electricity that is used in the production of manufactured goods. This bill was introduced early in the 2005 session and for some reason still sits in the House Ways & Means Committee late in the 2006 session.

The cost of energy used in the manufacturing process has grown rapidly and now is the second largest cost in the process of producing goods. And it appears the trend of such costs is going straight up with no end in sight. Georgia is the only Southeastern state – and one of only 10 in the U.S. – that levies a sales tax on energy used by manufacturers.

So as energy costs continue to climb, we are further punishing our manufacturers with a tax increase. While the state treasury benefits from this windfall, it hits some of our best employers where it hurts the most, driving up their costs while trying to remain competitive in a global marketplace.

Don’t take my word for it. Listen to Mike Synyard, president of Packaging Corporation of America, whose plant in my district is the largest single taxpayer in Lowndes County and purchases more than $22 million worth of energy annually: “By our state’s failure to recognize the impact of escalating energy prices on Georgia manufacturers, and our state’s failure to offer any immediate sales tax relief, while the state enjoys a revenue windfall, our state’s leadership in running the very real risk of running countless thousands of manufacturing jobs out of Georgia! … Relief from this noncompetitive, burdensome and basically unfair tax is essential to this mill’s continued livelihood in Valdosta.”

HB 209 is also strongly supported by numerous statewide business groups, including the Georgia Chamber of Commerce, Georgia Industry Association, Georgia Mining Association, Georgia Forestry Association, the Association of Georgia’s Textile, Carpet and Consumer Products Manufacturers, the Georgia Pulp and Paper Association and the Georgia Chemistry Council. These groups are part of the Coalition for Fair Energy Taxation.

Georgia is supposed to be a business-friendly state. Gov. Perdue himself said the state should not be enjoying a revenue windfall as a result of skyrocketing energy costs. Passing HB 209 and repealing this outdated and anti-competitive tax now to bring immediate help to our manufacturers should be a no-brainer.

Why has this legislation been stuck in committee for over a year? Why aren’t the governor and members of the legislative majority leadership championing a pro-business bill that will save Georgia jobs? How many more thousands of jobs does our state have to wave goodbye to before someone answers the wakeup call?

This should not be about partisan politics. Rep Jeff Lewis (R-White) is the chief sponsor of HB 209, and I will lead a bipartisan effort to pass the legislation in the Senate if and when it gets to our side of the Capitol. (All tax-related legislation must originate in the House of Representatives.)

The end is near for the 2006 legislative session, and Georgia jobs are at stake right now. It has been well documented that chemical and paper firms are shifting more production abroad in search of lower costs, notably for natural gas.

In order to remain competitive with our sister states in the recruitment of industry and, especially, to help our existing businesses survive, we must act now to grant immediate tax relief by repealing the state sales tax on energy use in the manufacturing process.

• Sen. Tim Golden is Chairman of the Senate Democratic Caucus, and represents the 8th District in the State Senate.