The real problem with HB 887: it starts in the wrong place

Yesterday I posted an initial piece dissecting some of the mechanics of House Bill 887, the Georgia Communications Services Tax Act, and said I’d loop back for a second swing at “the real problem” with the bill.  Here goes.

The real problem is that it proposes to serve the wrong areas – or at least the wrong areas first.  Specifically, it says that the first three rounds of state grants to be made under the proposed “Georgia Reverse Auction Broadband Deployment Program” should go to “unserved” areas.

That sounds natural enough until you actually think about it.  There’s a reason those areas are unserved.  There’s hardly anybody there.  If there were, AT&T, Comcast and other telecom and cable providers would already be investing their own capital in sparsely populated rural counties.  At this point, no amount of publicly-funded broadband (which, by the way, would be paid for primarily Metro Atlanta taxpayers under the current bill) would do much to address the basic problems faced by Georgia’s poorest, least-educated and sickest communities.

In most of my Trouble in God’s Country research and writing, I’ve tried to stick to data analysis and avoid editorial commentary.  In various presentations, though, I’ve ventured an unpopular opinion that I’ll repeat here: we’re already into a triage situation in much of rural Georgia, especially from the gnat line south.  With some communities, it’s time to give them a toe tag and stop throwing good money after bad.

Which is not to say our state government should abandon these areas altogether.  One of my reasons for pursuing my Trouble in God’s Country research is that I believe the continued decline and deterioration of rural Georgia will simply become an ever-larger albatross around the neck of the state and, inevitably, Metro Atlanta.  Better to address the problems now rather than let them fester.

So I applauded the creation of the House Rural Development Council and their efforts over the past nine months.  I just think they got to the wrong conclusion, at least on rural broadband, and that by trying to tackle the “unserved” areas first, they’re starting at the wrong end of the problem chain.

The better starting point, in my view, would be the state’s regional cities – Macon, Rome, Augusta, Savannah, and Columbus, et al.  With just a few exceptions these communities are relatively stagnant or in various states of decline and deterioration.  Albany, once a very vibrant South Georgia city, now ranks as one of the 10 most “distressed” small-to-mid-sized cities in America – right behind Flint, Mich., in the 2017 Distressed Communities Index published by the Economic Innovation Group.  If these trends are allowed to continue – if these regional cities are essentially allowed to fail – then the collapse of the rural areas surrounding them will only accelerate.

My own politics on this kind of thing are pretty liberal.  I don’t have a philosophical problem with spending public money on big problems like this.  I don’t even object to Metro Atlanta tax dollars being diverted to address out-state problems.  I think it’s in Metro Atlanta’s interest to invest in other areas of the state and, in particular, to help revitalize and reinvigorate the regional cities.  I don’t know exactly how to do that, but if the decay continues, sooner or later – and probably sooner – Macon’s problems will begin to wash up on Metro Atlanta’s doorstep.

Further, economic development doesn’t have to be a zero sum game.  As I told the AJC’s Bill Torpy last week, Metro Atlanta has morphed into something like an intergalactic black hole that is pulling in the vast majority of the state’s economic prowess and educational muscle.  As the region continues to expand, it seems to me it ought to be possible to develop what amount to colonization strategies aimed at purposefully deploying more of that economic and educational strength to satellite cities that are increasingly being pulled into Atlanta’s orbit: Macon, Columbus, Carrollton, Rome, Gainesville, Athens, etc.  Working with those cities to help beef up their industrial and technological infrastructures – and their human capital – should be a win for them as well as Metro Atlanta.

One of the ideas that came out of the House Rural Development Council was to give tax credits to affluent Georgians to move to rural Georgia – in other words, to literally use tax dollars to pay people to move to those areas.  That proposal was apparently strangled in its legislative crib, and appropriately so.

But finding ways to create targeted incentives for people – and businesses – to move to the regional cities might actually make sense.  To that point, so might an effort to modernize the state’s job tax credit program.  For years now, Georgia (like many other states) has maintained a job tax credit program aimed primarily at providing incentives for businesses to create jobs in the state’s poorest counties.  The Georgia Department of Community Affairs, which administers the program, puts 71 counties in that poorest group of counties; go into, say, Mitchell County and create just two jobs and the state will give you $8,000 in tax credits for up to four years against your Georgia corporate income tax.  At the other end of the spectrum, to get a job tax credit in Forsyth or Gwinnett counties, you’d have to create at least 25 jobs, and the tax credit per job would only be $1,250.  (And, yes, that means folks in Forsyth and Gwinnett counties are helping subsidize job creation in Mitchell County.)

Frankly, I’m not sure two new jobs in Mitchell County is worth $36,000 in state tax breaks.  But the establishment of a new software engineering company and the creation of a couple of dozen or so high-skilled jobs in Rome or Macon or Gainesville might be worth a good bit more than that – especially if the local governments put some skin in the game and, as part of the effort, make meaningful commitments to supporting the rural communities surrounding them.

As I’ve said before, these are tough nuts to crack and I don’t have all the answers.  But I’m pretty sure that plowing millions of dollars into rural broadband – at least right now – isn’t one of them.