New Georgia Legislation Encourages Job Growth in State

Thursday, May 17th, 2012

Georgia citizens should soon see new job opportunities in the state thanks to aggressive measures passed this year by the Georgia legislature. Business-friendly bills signed into law by Governor Nathan Deal will benefit manufacturers, the film industry, technology and other start-up companies, the life sciences sector and businesses large and small in many other industries. All economic development-related statutes will continue to apply to both new and existing companies in Georgia.

“This has been the best year in recent memory for legislation supporting economic development in Georgia,” said Chris Cummiskey, Commissioner of the Georgia Department of Economic Development. “We appreciate Governor Deal’s leadership on this issue and the interest our legislators have taken in keeping Georgia on the front lines of global commerce. These new laws are great new weapons in our economic development arsenal and lay the groundwork for even more job creation in Georgia.”

The following is a summary of the legislation passed by the 2012 Georgia General Assembly and subsequently signed into law by Governor Deal.

Elimination of the Sales and Use tax on energy used in manufacturing (HB 386)

This statute applies to energy used directly or indirectly in manufacturing. It puts Georgia on a more level playing field with competitive states that already have some variety of exemption on energy use, and is anticipated to foster interest from both existing and potential new manufacturers. The measure was one of several recommended by the Georgia Competitive Initiative (GCI), the strategic economic development plan developed under Governor Deal. The tax will be phased out over four years, although criteria exist for which an immediate phase-out can be offered if Georgia is competing with another state for a project with potentially significant economic impact. HB 386 takes effect Jan. 1, 2013.

Discretionary elimination of Sales and Use tax for construction materials (HB 386)

Start-up costs are often challenging until a company becomes operational and begins reaping profits. This new statute, part of the same bill as the energy tax exemption, gives Georgia the option to offer a sales and use tax exemption on construction materials to help defray such costs. The exemption can only be used for the expansion or location of a competitive project of regional significance. Such projects must meet certain criteria and be certified by the state’s commissioner of economic development. The exemption would apply to both state and local portions of the sales and use tax. It is retroactive to Jan 1, 2012 and expires June 30, 2014.

Freeport expansion and the elimination of the Local Inventory tax (HB 48)

This bill encourages job growth, especially by the retail industry, in local communities by enabling them to compete with jurisdictions outside the state that may not have an inventory tax. Eligible local governments can expand the Freeport Exemption allowed under current law and authorize a call for a referendum to approve the creation of a Level Two Freeport Exemption, which would exempt from local property tax any business inventory or real property not covered in the current Freeport Exemption. HB 48 is effective immediately.

Enhancements in statutory Job tax credits, Research and Development tax credits, Port tax credits, and Quality Job tax credits (HB 868)

A number of changes strengthened these tax credits through further refinements. In addition to the eight industries currently covered, biomedical manufacturing and alternative energy products (solar, wind, biofuel, electric vehicle) are now eligible for these statutory tax credits. Companies qualified for the R&D tax credit can now take credits earned against their state withholding liability, incentivizing the growth of technology-based companies with large R&D expenditures. The Port Tax Credit Bonus has been expanded for use in economically-challenged areas such as Less Developed Census Tracts, Military Zones, and Opportunity Zones. Finally, jobs with pre-determined end dates now qualify for the Quality Job Tax Credit, an enticement to military contractors who may be affected by current or potential BRAC realignments. HB 868 is retroactive to Jan. 1, 2012.

Changes to the Mega Project tax credit (HB 868 & HB 1027)

This tax credit applies to qualified companies employing 1,800 new employees, and either investing a minimum of $450 million or meeting a minimum annual payroll of $150 million. Changes will further motivate companies to create new jobs to Georgia: not only companies, but their affiliates, can now qualify for the Mega Project tax credit, and companies with a larger capital investment can take advantage of an extended ramp-up period. The maximum number of jobs a company can claim for the Mega Project tax credit is raised from 3,300 to 4,500. HB 868 and HB 1027 are retroactive to Jan. 1, 2012. 

Additions to discretionary deal-closing funds (HB 742)

Significant infusions into Georgia’s deal-closing funds boost the state’s competitive status among its peers. After several years of operating on reserves and smaller amounts during the recession, for the state’s 2013 fiscal year Governor Deal tapped a portion of the state’s federal mortgage fraud settlement to encourage companies to create jobs in Georgia. A total of $78.5 million has been designated to the Regional Economic Business Assistance (REBA) fund, and $44.8 million goes to the OneGeorgia fund for rural communities. Both funds are awarded to specific communities for fixed assets involving a particular project, usually by recommendation of the Department of Economic Development. HB 742 takes effect July 1, 2012.

Employees' Retirement System of Georgia Enhanced Investment Authority Act (SB 402)

This measure, recommended by the Georgia Competitive Initiative, means Georgia will join other states that enable their retirement assets to be invested in certain types of alternative investments and other private investments. Venture capital funds can now access state pension funds, thus encouraging start-up companies that are commercializing the vast amount of ground-breaking research generated by Georgia’s universities to stay and grow in the state. Yearly investments are capped at one percent of the state retirement system’s assets. SB 402 takes effect July 1, 2012.

Amendments to the 2008 Georgia Entertainment Industry Investment Act (HB 1027)

This bill amends several elements of the 2008 Georgia Entertainment Industry Investment Act, which has increased the film industry’s economic impact in Georgia more than 1,000 percent. These amendments will increase the act’s marketing value for the state by legislating a more advantageous logo placement and a Georgia web link. They also more clearly define film distribution procedures, ensure all appropriate income is captured and appropriately taxed by the State of Georgia, and establish a cap on interactive entertainment projects. HB 1027 takes effect Jan. 1, 2013.

Strengthening Georgia open records laws regarding economic development (HB 397)

This legislation balances the Georgia Department of Economic Development (GDEcD)’s commitments to both taxpayers and its client companies, and enables the agency to work in an optimal environment for job creation yet share information with the public in a timely way. The legislation applies to state projects and specifies that projects involving more than 50 jobs or $25 million in investment are protected from open record requests until a binding commitment has been made by the prospect company, or the project is terminated. If a project is located, public notice of the binding agreement and committed REBA or OneGeorgia funds must be posted on the GDEcD website and in the legal organ of each of the counties where the project is located.

For details about 2012 Georgia legislation signed into law, please visit