It will take Georgia more than 72 years to see a return on its investment in its rural jobs tax credit program, a recent state analysis found.
The state program provides capital funding for rural businesses by giving tax credits to capital investors. It was established through the Georgia Agribusiness and Rural Jobs Act in 2017 to help fuel economic growth in the state’s rural areas.
The economic analysis conducted by the Georgia Department of Audits & Accounts and the Fiscal Research Center at Georgia State University is one of many reviews Georgia will conduct of state tax credits.
Investors can claim up to 15% of the total amount invested in rural businesses each year for four years without exceeding their tax liability. Unused credits of up to $60 million may be carried forward indefinitely.
According to the report, the program will have a fiscal impact of between $54.7 million and $56.3 million from tax year 2018 through tax year 2023. Most of the expenses will be from tax revenue that would have been collected from investors who participate in the program. Researchers estimated that would result in a $60 million loss for the state.
The program generates between $580,000 and $830,000 in revenue annually for the state, which means it would take Georgia 72 years to cover the $60 million loss in revenue.
Researchers project that the program will create between 290 to 415 jobs over the next five years, with an average labor income of $47,000 per job.
According to the report, 33 businesses have received 38 investments from the rural fund, totaling $101 million since the 2018 tax year through the 2020 tax year.
While investors used $7.8 million in tax credits from the program in 2020, about $15 million were granted in the 2020 tax year, leaving investors with $7.2 million in carryover credits. Researchers estimated rural investments generate between $945,000 and $1.3 million in new state and local tax revenue each year.
During the 2021 legislative session, the General Assembly considered but stalled on legislation to increase the tax credit by $100 million.
Gov. Brian Kemp signed a bill into law in May that allows legislative finance leaders to request economic analyses each year of existing or proposed Georgia laws that deal with tax exemptions, credits, deferrals, rebates, abatements, or preferential rates.