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Is there a relationship between community prosperity and foreign-born populations?

I’m a messy and disorganized researcher.  Within an hour or so after diving into a new piece of research my desk and the floor around me are littered with scraps of paper and notes.  I’m also easily distracted.  I’m bad about being drawn to bits and pieces of information that aren’t central to what I’m trying to focus on.

It happened a week or so ago when I was mucking around in a mega-spreadsheet of data shared with me some months back by the Economic Innovation Group (EIG)[i], a Washington think-tank that has studied and ranked all the counties and cities (with populations of 50,000 or more) in the country on various metrics measuring prosperity and, more specifically, “distress” on a community.

For some reason, my eye kept drifting out to column AF, the 29th and very last column on the far right-hand edge of the spreadsheet.  It showed the percentage of foreign-born population for each community.

The reason it kept catching my eye was that it seemed, in my casual observation as I was working on my last post, that communities with higher percentages of foreign-born residents were doing better than those with lower percentages.  I noticed, for example, that the foreign-born population in Albany, which has the worst Distressed Community Index (DCI) score of any city in Georgia (and one of the worst in the country), was less than three percent of the total population.  In contrast, Alpharetta’s population is 23.3 percent foreign-born and it posted the best DCI score in the state.

So, I decided to take a deeper dive.  I’m not trained as a statistician, so I’m not prepared to say there’s a correlation, let alone a causal relationship.  But there are absolutely some interesting patterns.  A more comprehensive look at all the Georgia cities included in EIG’s dataset provides one (those with populations of 50,000 and up), as this graph shows.Foreign-Born Pops and EIG Scores

The five Georgia cities with the best DCI scores all had significant foreign-born populations.  As EIG’s DCI score hit 50, the midpoint, the percentage of foreign-born residents in a city started to drop precipitously.  About the only things interrupting a nearly perfect inverse relationship between rising DCI scores and falling foreign-born populations was Athens-Clarke, a university city with a significant foreign-born faculty and student body.

Then another comparison occurred to me.  In December 2016 I wrote a piece contrasting Gwinnett County to all 56 counties of interior South Georgia.  That contrast was not charitable to South Georgia.  Among other things, I found that Gwinnett County, with only about three-fourths the population of the 56 South Georgia counties, generated 22 percent more in personal income and nearly 50 percent more in federal taxes.  At the same time, it consumed substantially less in social services – less than a third as much in Medicaid costs, for example.

At the time, I wasn’t looking at immigration or foreign-born populations or even thinking about whether there was a relationship between immigration and the overall prosperity of a community.  But, for what it’s worth, it turns out that Gwinnett County has the second-highest proportion of foreign-born residents in the state, 24.7 percent.[ii]  Its overall distress score is 9.0, which puts it 10th in the state and 282nd in the nation.  Gwinnett also does well in other rankings – 15th best in the latest Georgia Department of Community Affairs (DCA) Job Tax Credit Rankings[iii] and 5th in the Robert Wood Johnson Foundation’s latest county rankings for health outcomes.

The proportion of foreign-born residents in the 56 South Georgia counties works out to 4.2 percent – fewer than 50,000 people altogether – not even a fourth of the 216,000 foreign-born residents in Gwinnett County.  More than 100 languages are spoken in Gwinnett County’s public schools, which, not for nothing, is the only school system in America to win the prestigious Broad Prize for education twice – first in 2010 and again in 2014.

Gwinnett County is, in fact, already a majority-minority county.  Only 40.3 percent of the county’s population is non-Hispanic white; blacks make up 25.4 percent of the population; Hispanics, 20.5 percent, and Asians or Pacific Islanders, 11.1 percent.

The same sort of picture emerges when you look at this through the prism of my “Trouble in God’s Country” regions.  My 12-county Metro Atlanta region, which generates the lion’s share of the state’s economic output, is home to about 47 percent of the overall population but nearly 72 percent of the foreign-born population.  As this table shows, Metro Atlanta is the only Trouble in God’s Country region where the percentage of foreign-born residents hits double digits.

Total Population % of the Population Foreign-Born Foreign-Born Population (Calculated)
Metro Atlanta 4,727,376 15.1% 715,490
Coastal Ga 579,879 5.4% 31,081
Middle Ga 1,749,350 3.9% 68,737
North Ga 1,882,410 6.9% 130,606
South Ga 1,160,305 4.2% 48,599
Totals 10,099,320 9.8% 994,513

 

Now, this is not to suggest that an infusion of foreign-born residents into a local population is a guarantee of improved economic and civic conditions.  You can absolutely find examples of communities with low percentages of foreign-born populations that are doing well.  And there are differences between the groups of cities shown in the chart above that should be acknowledged.

Geography is one.  All the cities with high distress scores and single-digit percentages of foreign-born residents are located from about the gnat line south; all the cities with low distress scores and double-digit percentages of foreign-borns are clustered across Metro Atlanta’s prosperous northern arc (as is Gwinnett County, and, for that matter, Cobb County, whose profile is fairly similar to Gwinnett’s).

So it may be that immigrants finding their way to Georgia migrated naturally to the most prosperous areas.  Or it may be that they don’t like gnats.  I blame the gnats.

________________________________

[i] Much of the raw data used in this post, and in the chart above, was provided to the author under license by the Economic Innovation Group (EIG), but the analysis and observations are entirely my own – as are any errors I might have made.  EIG does not guarantee the accuracy or reliability of, or necessarily agree with, the information in this article.

[ii] The only county with a higher percentage of foreign-born residents than Gwinnett is hapless Stewart County, in southwest Georgia.  The nearly 1,700 foreign-born residents there constitute about 29 percent of the local population, but you probably wouldn’t know it from walking down the street in Lumpkin, the county seat, since virtually all of them are locked up in a federal Bureau of Immigration and Customs Enforcement prison.

[iii] The Georgia Department of Community Affairs issues Job Tax Credit rankings each year, based on a formula built around local per capita income, poverty rates, and unemployment rates.  Because the purpose of the program is to try to drive economic development in Georgia’s poorer areas, it ranks the counties from worst to best.  On that list, Gwinnett County ranks 145th.  For my purposes, I reverse the DCA list to produce a best-to-worst ranking.

 

Putting the divide between Georgia’s rural and urban counties into perspective

One of the hard things about telling the “Trouble in God’s Country” story is figuring out how to explain the magnitude of Georgia’s urban-rural divide in ways that are actually useful – to the general public as well as policy makers.    It’s not exactly news that Metro Atlantans are more prosperous economically, better educated and healthier than their country cousins.

And, we’ve long had various types of county rankings, and one county is always No. 1 and another is No. 159.  (Right now, Forsyth County ranks first in most categories you can come up with, and we have something of a barroom brawl amongst a fair-sized group counties to see which is at the bottom of the heap in Georgia.  More later on this.)

But rankings don’t give you a real sense of the gap between Georgia’s best and worst, or whether that gap is getting bigger or smaller.  Lately I’ve been wallowing around in various piles of national and 50-state data to see if I could find anything that might be helpful.  I’ve still got more work to do, but herewith a few nuggets from my wallowing to date:

  • The gap between Georgia’s best-off and worst-off counties is probably bigger than in just about any other state. I’ve got a couple of sources on this.  One is from a Washington think tank called the Economic Innovation Group (EIG).  EIG has pulled together several tons of economic, educational, poverty and housing data on all 3,000-plus counties in the country and generated what it calls a “Distressed Communities Index,” or DCI, for each county.  Then it used those index scores to create national rankings.  The best possible DCI is 1 and the worst is 100.  For 2017, the top Georgia county in EIG’s rankings was Oconee County, with a DCI of 1.1 (Forsyth County came in second with a DCI of 1.6).  Oconee ranked 34th nationally; Forsyth, 49th.  At the very bottom of the EIG rankings, in 3,124th place, was Stewart County, with a DCI score of 99.9.  That’s about as big a divide as you can find.  Also worth mentioning: Stewart County had some real competition for that last-place finish.  Five other Georgia counties were nipping at its heels in a race to the bottom: Macon, Hancock, Calhoun, Wheeler and Taliaferro counties all had Distressed Community Indexes of more than 99.
  • My second pot of data on this comes from the folks at County Health Rankings & Roadmaps. Because their data is presented on a state-by-state basis, it takes a little work to build a national picture.  Their report includes premature death rates for 2,900 counties (a couple of hundred had such small populations that they couldn’t generate reliable rates).  Premature death rates – known formally as Years of Potential Life Lost before Age 75, or YPLL 75 – are sort of the Dow Jones Industrial Average of population health.  It’s the best single number to watch to get a feel for the general health of a community.  (EIG, by the way, doesn’t include any health data in its DCI calculations, so this is a useful complement to its work.)  In these rankings, Forsyth is the top-ranked Georgia county and Oconee came in 2nd; their national ranks were 55th and 185th, respectively, and their respective YPLL 75 rates were 4265 and 5283 (with YPLL 75 rates, the lower the number, the better).  At the bottom of this list of 2,900 counties, we find a somewhat different list of Georgia counties.  Miller County came in 2,866th with a YPLL 75 rate of 15646; Warren County did a little better, finishing 2,862nd with a rate of 15422.  Twiggs County came in 2,850th with a score of 15001 and Quitman County finished at 2,841st with a rate of 14,797.  These are truly third-world numbers and obviously among the worst in the nation.
  • One of the things that becomes clear from studying the EIG and County Health Rankings data is that it’s not just rural areas that are in trouble. Just about every major population center outside Metro Atlanta ranks poorly nationally on just about every metric available.  Worst-off is Albany, which posted a 2017 EIG Distress Score of 99.1 and finished 8th on EIG’s list of America’s most-distressed small cities – just barely ahead of Flint, Michigan.  But most of Georgia’s other regional cities didn’t fare a lot better.  On EIG’s list of cities with populations of more than 50,000, Athens-Clarke County, Augusta-Richmond County, Columbus and Valdosta all finished in the bottom quintile nationally, and Savannah just barely avoided falling into the lowest grouping.  (For some reason, EIG didn’t include Macon on its list of Georgia cities, but Bibb County was the second-worst major Georgia county on EIG’s county list, not far ahead of Albany’s Dougherty County.)  The City of Atlanta was in the middle of the pack nationally, with a DCI score of 59.6.  At the top of the Georgia pile was the City of Alpharetta, which ranked 21st nationally with a Distress Score of 2.6 (again, contrast that with Albany’s 99.1 and you find about as big a divide as possible between otherwise comparable Georgia cities).  I won’t go into detail here, but the same is generally true with the County Health Rankings data; Muscogee, Bibb, Richmond and Dougherty all finish in the bottom 500 of the 2,900 counties it ranked nationally.

I think this is important because I’ve long believed that any effort to improve Georgia’s rural areas has to include – and probably start with – the regional hub communities.  Whether they like to admit it or not, rural areas depend on those major populations centers for a wide range of support systems, including employment, healthcare, education and shopping.  If the Macons and Augustas are allowed to slip past some hard-to-discern tipping point, it may well doom dependent rural areas for multiple generations.  As a practical matter, it may already be too late for Albany and much of Southwest Georgia, where the population that isn’t already packing up and leaving is among the least-educated and least-healthy in the nation (if not the world).

——————–

Following are four tables showing the top and bottom 10 Georgia counties in the Economic Innovation Group’s 2017 Distressed Communities Index scores and rankings, and premature death rates as published by County Health Rankings & Roadmaps.  The national rankings shown with the premature death data were developed by the writer by assembling a spreadsheet combining County Health Rankings & Roadmap’s from all 50 states and the District of Columbia.

EIG Top 10 Georgia Counties – 2017
County Region EIG Distress Score EIG National Rank
Oconee North Georgia 1.1 34
Forsyth Metro Atlanta 1.6 49
Cherokee Metro Atlanta 2.9 92
Fayette Metro Atlanta 4.9 152
Paulding Metro Atlanta 5.2 163
Coweta Middle Georgia 5.6 174
Cobb Metro Atlanta 6.1 191
Harris Middle Georgia 8.3 261
Henry Metro Atlanta 11.6 362
Gwinnett Metro Atlanta 12.0 375

 

EIG Bottom 10 Georgia Counties – 2017
County Region EIG Distress Score EIG National Rank
Jefferson Middle Georgia 97.8 3,057
Sumter South Georgia 98.1 3,065
Lanier South Georgia 98.4 3,075
Telfair South Georgia 98.9 3,093
Macon Middle Georgia 99.1 3,099
Hancock Middle Georgia 99.5 3,110
Calhoun South Georgia 99.7 3,117
Wheeler South Georgia 99.8 3,119
Taliaferro North Georgia 99.8 3,120
Stewart South Georgia 99.9 3,124

 

County Health Rankings & Roadmaps

Top 10 Georgia Counties for Premature Death (2015-2017)

County Region Premature Death Rate National Rank
Forsyth Metro Atlanta 4265 55
Oconee North Georgia 5131 185
Gwinnett Metro Atlanta 5283 223
Fayette Metro Atlanta 5521 278
Cobb Metro Atlanta 5605 299
Cherokee Metro Atlanta 5654 315
Columbia North Georgia 6084 466
Harris Middle Georgia 6104 476
Wheeler South Georgia 6384 581
Echols South Georgia 6476 633

 

County Health Rankings & Roadmaps

Bottom 10 Georgia Counties for Premature Death (2015-2017)

County Region Premature Death Rate National Rank
Crisp South Georgia 11837 2,639
Emanuel Middle Georgia 11862 2,645
Clinch South Georgia 12262 2,694
Clay South Georgia 12341 2,706
Jeff Davis South Georgia 12805 2,742
Candler South Georgia 13551 2,792
Quitman South Georgia 14797 2,841
Twiggs Middle Georgia 15001 2,850
Warren Middle Georgia 15422 2,862
Miller South Georgia 15646 2,866

 

© Trouble in God’s Country 2019

Coming to Rural Georgia from Outer Space: Broadband Internet Service

I’ve been arguing pretty much since the rural broadband craze started that we’d be nuts to plow probably at least a billion tax dollars — most of it from Metro Atlanta — into running fiber to Georgia’s most sparsely populated counties.

Give the private sector and advancing technology time, I’ve felt, and we’ll probably get a better solution long before the state could plow up all the red clay in rural Georgia and put fiber in the ground.

Satellite-based internet has been around for years, although one of the legitimate raps on its potential as a consumer solution has been speed: the satellites are so far above the Earth that it takes a while for the signal to bounce back and forth.

Well, now comes SpaceX with the launch of 60 low-orbit satellites designed to solve that problem: https://nyti.ms/2M8E4nH

Per the New York Times’s story, these new satellites will orbit the planet at a much lower altitude than the current 22,000 miles: “The Starlink satellites will orbit much lower — between 210 and 710 miles above the surface. That reduces the lagginess, or latency. SpaceX has said performance should be comparable to ground-based cable and optical fiber networks that carry most internet traffic today. Starlink would provide high-speed internet to parts of the world that currently are largely cut off from the modern digital world.”

The Times’s story indicates it’ll take nearly 2,000 of these low-orbit satellites to blanket the planet, but my hunch is SpaceX will get that done long before the State of Georgia could hardwire rural Georgia — and we won’t have to pay for it.

Trump says America is ‘FULL.’ Tell that to Rural Georgia.

(Note: I wrote this yesterday afternoon and decided to sleep on it and give it a fresh read-through this morning.  In the process, I got scooped by The New York Times, which is leading this morning’s web edition with a terrific story on this same issue at https://nyti.ms/2VyTbam.)

Lately President Trump has taken to proclaiming that the United States is “full.” He said it a few times over the last few days and has tweeted it at least a couple of times, including Sunday.

Trump Country Full

Well, not really.
Let me say here that I know full well that this notion is entirely ludicrous and will no doubt subject me to all manner of ridicule, much of it probably deserved. Truth is, I’m not really suggesting anything specific. I’m not even sure what a specific recommendation would look like.
But …
The truth is that a core problem afflicting rural America is population loss. Here in Georgia, whole regions are hollowing out. In 2017, 71 of Georgia’s 159 counties recorded more deaths than births.  All but one, Glynn County, were rural.
Georgia has 33 counties with populations of less than 10,000 people. Of those, only five posted any population gains at all over the five-year period 2013 through 2017 (the most recent for which the U.S. Census Bureau has posted estimates). And of the five that did grow, only two managed to grow more than one percent – for the entire five-year period.
The 16 counties that make up the southwestern-most corner of Georgia lost more than 9,000 people in that five-year period, or 3.4 percent of their population. Only Lee County, which has evolved as the white-flight county north of Albany and Dougherty County, posted a gain (2.6 percent) for that five-year period; the other 15 all lost population.
Dougherty County, historically the economic, cultural and political center of Southwest Georgia, is bleeding population; in the 2013-2017 span, it lost 5.5 percent of its population, or more than 1,000 people a year.
It shouldn’t need to be said that losing population is generally not a good thing. The pattern in rural Georgia is that young people leave, especially if they have a college education. Population decline naturally shrinks the consumer base, and that leads to weakened sales and property tax revenues. It’s no exaggeration to suggest that some areas of rural Georgia are now in a death spiral.
Could it be that we have two problems here that might help solve one another?
Again, I know this is nuts, for a whole host of reasons. Neither Trump nor his loyal Republican Southern governors (who preside over many of the worst rural disaster areas in the country) would even begin to entertain a strategy of deliberately importing, say, caravans of people from Mexico and Central America to dying rural communities in South Georgia. What’s more, the vast majority of those counties voted overwhelmingly for Trump, and it’s a sure bet these are the folks who favor building that wall, even if we have to pay for it.
All that said, it’s worth noting that, to some degree, people from outside the U.S. are already finding their way to struggling rural communities, even as locals move away. Probably the most dramatic example in Georgia is Stewart County, which is one of those 16 counties in deep southwest Georgia.
Over the five-year period form 2013 through 2017, according to Census Bureau data, 552 locals moved out of Stewart County, and there were 122 more deaths than births. But 479 people from outside the United States moved into Stewart County.  (Note to self: Find out what the heck’s happening in Stewart County.)
For that 16-county Southwest Georgia region, international in-migration is about the only positive trend going. For the period 2013-through-2017, literally every one of those 16 counties suffered a loss of domestic population – locals moving out. Half that group had at least some international in-migration. Altogether, the 16-county region lost 13,515 domestic residents and got back about one-tenth of that – 1,332 people – in international migrants.
As a region, Southwest Georgia is still reporting more births than deaths, but the margin is narrowing. Eleven of the 16 counties posted more deaths than births for the 2013-through-2017 period, and not one of the 16 is experiencing anything that could be considered a positive trend in its birth-to-death ratio.
As this graph shows, these trends have been a long time developing. The number of births in the region began to drop precipitously in 2007, and the number of deaths began a slower climb in 2011. If the current trends continue, these lines will cross within a few years.

SW GA Births & Deaths 1994-2017.jpg
It will, of course, take a lot more than new population growth to revitalize rural Georgia’s struggling counties and communities.  But without that new population, it’s not clear that much else will matter.

For the third time in this piece, I know what I’m suggesting here is crazy and has less than zero chance of happening, in any form or fashion. But for South Georgia and much of the rest of rural America, the only thing that might be crazier is to do nothing. For these areas, it’s way past time to start thinking outside the box.

(Notes: The data in this post was drawn primarily from two sources.  The population data came from a recent update by the USDA’s Economic Research Service of U.S. Census Bureau county-level estimates.  The data from the Births & Deaths chart immediately above was pulled from the Georgia Department of Health’s OASIS system.  The 16 counties included in the 16-county Southwest Georgia region referenced in this piece are: Baker, Calhoun, Clay, Decatur, Dougherty, Early, Grady, Lee, Miller, Mitchell, Quitman, Randolph, Seminole, Stewart, Terrell, and Webster.)

© Trouble in God’s Country 2019

2018 Georgia Election Takeaway: Rural Georgia ain’t going down easy

My Trouble in God’s Country research has been focused primarily on the widening economic, educational and health divides between Metro Atlanta and the rest of the state, especially rural Georgia.  The extent of the political divide has been obvious and well understood for a long time, and it’s not a topic I’ve paid much attention to.

But last Tuesday night, as I watched the election results come in and poked around on the AJC and Georgia Secretary of State’s websites for county-level returns, I noticed that Democratic gubernatorial nominee Stacey Abrams seemed to be lagging behind her party’s 2014 gubernatorial nominee, Jason Carter, in rural Georgia but outperforming him in Metro Atlanta and other urban areas.

Did that mean, I wondered, that urban and rural Georgians were continuing to grow even further apart politically as well as economically, educationally and health-wise?

To answer this question, I pulled top-of-ticket results for the last five general elections in Georgia – the 2010 gubernatorial election, 2012 presidential, 2014 gubernatorial, 2016 presidential, and 2018 gubernatorial.  Yeah, you can quibble with comparing gubernatorial and presidential results, but in this case I think it’s useful.

As a backdrop, it bears noting that virtually everybody agrees that population growth and demographic change are working to the advantage of Democrats and will eventually tip the state back to their advantage.  That’s inarguably true.  But against that backdrop, the first conclusion to be drawn from the 2018 results is this: Rural Georgia ain’t going down easy.

As of the results posted on the Secretary of State’s site Monday morning, November 12, Republican gubernatorial nominee Brian Kemp is leading in 130 mostly rural counties while Abrams is ahead in the other largely urban 29 counties.  The counties Kemp is carrying are home to 2.9 million registered voters versus 3.5 million in the Abrams counties.

With that kind of numerical advantage, you have to wonder how Abrams can be losing.  Two answers.  The first is turnout.  Kemp got a 61.5 percent turnout in his 130 counties versus 59.8 percent in the Abrams counties – not huge, but important in a race as close as this one is.  (As of this writing, the Secretary of State’s website is showing Kemp leading 1,975,843 to 1,916,943.)

The second obvious factor was margin.  Kemp is winning bigger in his small rural counties than Abrams is in her big urban ones.  Which is saying something, because Abrams is ahead by a margin of 66.7 percent to 33.3 percent, or 2:1.  Kemp, though, is running up the score in his 130 counties by a margin of 71.4 percent to 28.6 percent.

And there are some interesting subplots under those topline numbers.  In Metro Atlanta, for example, heavily black and Democratic Clayton County, on the southside, went overwhelmingly for Abrams: 88.2 percent to 11.8 percent for Kemp.  But turnout was only 54.2 percent.  Clayton County gave Abrams her largest margin of victory but one of her smallest turnouts.

On the north side of Metro Atlanta, meanwhile, heavily white and Republican Cherokee and Forsyth counties went for Kemp by a combined margin of 72.5 percent to 27.5 percent — and their combined voter turnout was 63.5 percent, nearly 10 points higher than Clayton County’s.  If Clayton County had matched the Cherokee-Forsyth turnout levels and maintained the same 88:12 split, Abrams would have netted another 12,000 votes.

But I meander.

Back to my original question: Is the political divide widening between Metro Atlanta and Rural Georgia?  The answer is an unequivocal yes – although you might not know it just to look at the statewide results.

In 2010, former Governor Roy Barnes, the Democrat who eight years earlier had surrendered the governor’s office to the first Republican winner in a couple of thousand years, was making a comeback attempt against Republican nominee Nathan Deal; Deal won handily, 55.2 percent to 44.8 percent.

(Caveat # 1: In this analysis, I am ignoring third party candidates and looking only at votes cast for the Democratic and Republican Party nominees.)

In the 2012 presidential election, GOP nominee Mitt Romney got 54 percent of the vote to 46 percent for President Barack Obama, the incumbent Democrat.  In the 2014 governor’s race, Governor Deal beat Democratic challenger Jason Carter by the same 54-to-46 margin.

In the 2016 presidential election, the margin actually got a little closer: Republican Donald Trump beat Democrat Hillary Clinton here in Georgia 52.7 percent to 47.3 percent, a margin of 5.3 percentage points.  And, of course, the margin in the current governor’s race is razor thin: Of the votes cast for either the Democrat or the Republican, Kemp currently has 50.8 percent of the vote to 49.2 percent for Abrams.

(Caveat # 2: The votes here in Georgia are, at this writing, still being counted, with an unknown number of provisional ballots still out.  We may or may not be headed for a recount if not a runoff.  Whatever the final results, they will obviously change the numbers I’m currently using, but I don’t think it will change the overall picture.)

So, over the past decade or so, the Republican margin of victory peaked at a little over 10 percentage points and has lately been shrinking down to a point or so.  But where those votes are coming from has shifted dramatically.

To get at this, I wallowed around in the data for a while and finally wound up breaking Georgia’s 159 counties down into four groups:

  • Big Democratic Counties. These are 16 counties that have at least 25,000 registered voters and have generally voted Democratic over the years. It includes the big ITP counties in Metro Atlanta and a couple of recent newcomers to the Blue column, Cobb and Gwinnett.  More than half the state’s registered voters live in these 16 counties.  In 2010, Barnes carried these counties over Deal by what seemed like a healthy 57.3 percent-to-42.7 percent margin.  This year, Abrams is leading Kemp 2:1 in these same 16 counties.  Put another way, these counties have shifted 9.8 percentage points further into the Democratic column.  One measure of this group’s population growth and rising clout is that Abrams already has more votes from these counties than Barnes and Deal combined in 2010.
  • Small Republican Counties. This is a group of 101 rural counties with fewer than 25,000 registered voters, and it’s pretty much a polar opposite of the Big D counties above.  In 2010, Deal carried these counties 2:1 over Barnes; this year, Kemp is ahead of Abrams just a hair shy of 3:1.  As a group, these counties are 7.7 percent redder now than they were in 2010.  The problem for Republicans is that many of these counties, especially in Middle and South Georgia, are hollowing out and losing population.  They may still be able to run up the score in these areas, but there’s not enough growth to keep up with the Big D counties.
  • Large & Middle-Sized Republican Counties. This is a group of 29 counties with at least 25,000 registered voters that are lining up with Kemp and other Republicans in this election cycle.  It includes most of the suburban and exurban counties surrounding Atlanta, as well as fast-growing communities in North Georgia and bedroom counties around the state (Oconee, Houston, Columbia, etc.).  The good news for Republicans is that these are for the most part growing counties and they are overwhelmingly red.  The less than good news is that they aren’t getting any redder; in fact, as a group, they’re 3.3 percentage points bluer this year than they were in 2010.  One example: Forsyth County gave 85.2 percent of its 2010 vote to Deal and only 14.8 percent to Barnes; this year, Kemp is carrying Forsyth with a relatively meager 71.6 percent to Abrams’s 28.4 percent.  That’s a 13.6 percentage point shift toward the Democrats in a decade.  Still, the GOP’s future in Georgia probably lies in retrenching in these counties.
  • Small Democratic Counties. These are 13 largely rural and heavily black counties with fewer than 25,000 registered voters that are still voting Democrat, but – like the Small Republican Counties discussed above – they’re actually trending Republican.  In 2010, they went nearly 60:40 for Barnes; this year, they’re a paler shade of blue and going 55:45 for Abrams.  If that’s good news for Republicans, the bad news is that, combined, these counties cast fewer than 90,000 votes.

So, urban Georgia is getting bluer and rural Georgia is getting redder.  This is obviously just a local example of the divide taking place all over the country and of the extreme polarization that has afflicted U.S. politics in recent years.

This chart shows Democratic and Republican votes by groups of counties for the 2010 and 2018 gubernatorial elections.

A key takeaway from this chart and analysis is this: If Brian Kemp hangs on and wins this election, he’ll owe his victory to two very disparate voting blocs of Republicans – very affluent, well-educated suburban and exurban voters on the one hand, and some of the least educated, poorest (and for that matter least healthy) voters in rural Georgia on the other.  My hunch is that their public policy priorities are very different, and balancing their interests will require a nifty bit of political magic.

Here’s the list of counties by the groups described above:

  • Big Democratic Counties: Bibb, Chatham, Clarke, Clayton, Cobb, DeKalb Dougherty, Douglas, Fulton, Gwinnett, Henry, Liberty, Muscogee, Newton, Richmond, Rockdale.
  • Big & Middle-Sized GOP Counties: Barrow, Bartow, Bryan, Bulloch, Camden, Carroll, Catoosa, Cherokee, Columbia, Coweta, Effingham, Fayette, Floyd, Forsyth, Glynn, Gordon, Hall, Houston, Jackson, Laurens, Lowndes, Oconee, Paulding, Spalding, Thomas, Troup, Walker, Walton, Whitfield.
  • Small Democratic Counties: Baldwin, Calhoun, Clay, Hancock, Jefferson, Macon, Randolph, Stewart, Sumter, Talbot, Taliaferro, Terrell, Warren.
  • Small Republican Counties: Appling, Atkinson, Bacon, Baker, Banks, Ben Hill, Berrien, Bleckley, Brantley, Brooks, Burke, Butts, Candler, Charlton, Chattahoochee, Chattooga, Clinch, Coffee, Colquitt, Cook, Crawford, Crisp, Dade, Dawson, Decatur, Dodge, Dooly, Early, Echols, Elbert, Emanuel, Evans, Fannin, Franklin, Gilmer, Glascock, Grady, Greene, Habersham, Haralson, Harris, Hart, Heard, Irwin, Jasper, Jeff Davis, Jenkins, Johnson, Jones, Lamar, Lanier, Lee, Lincoln, Long, Lumpkin, Madison, Marion, McDuffie, McIntosh, Meriwether, Miller, Mitchell, Monroe, Montgomery, Morgan, Murray, Oglethorpe, Peach, Pickens, Pierce, Pike, Polk, Pulaski, Putnam, Quitman, Rabun, Schley, Screven, Seminole, Stephens, Tattnall, Taylor, Telfair, Tift, Toombs, Towns, Treutlen, Turner, Twiggs, Union, Upson, Ware, Washington, Wayne, Webster, Wheeler, White, Wilcox, Wilkes, Wilkinson, Worth.

© Trouble in God’s Country 2018

Breaking News: Pierce County GOP opposes secession

Well, darn.

For a few days there I thought we had a major story brewing down in Pierce County.

Leaders of the Republican Party in that deep South Georgia community had included a question on Tuesday’s party primary ballot asking whether the “counties South of Macon (should) join together to form the 51st state of South Georgia.”

Going into Tuesday’s election, I would have bet a cup of coffee it had a fair chance of passing. I have spent a good bit of time in South Georgia over the years and folks down there can be a provincial lot.  Many don’t much care for Atlanta.

But in a perhaps surprising display of common sense, Pierce County’s Republicans voted better than two-to-one not to break away from North Georgia and Metro Atlanta.  The final tally was 703 ayes to 1,844 nays.

On a personal level, I’ll confess to a certain amount of disappointment a new State of South Georgia is now apparently off the table.

It probably would have moved my home state of Mississippi up in the national rankings overnight.

In one fell swoop, it would almost certainly have created the poorest, sickest and least educated state in the union. Folks in Mississippi (and for that matter Alabama) would have been able to look forward to saying “thank God for South Georgia” when all the new national education and economic rankings come out each year.

Alas, I guess that’s not to be.

More seriously, the Pierce County initiative, unsuccessful though it was, does beg a serious discussion about the relationship between South Georgia (and, more generally, rural Georgia) and Metro Atlanta in particular – especially given the way the head of the Pierce County Republican Party, Kay Godwin, framed the issue going into Tuesday’s election.

“We don’t get anything from Atlanta,” she told The Blackshear Times. “This is an effort to force them to pay attention to us.  We are not going to secede, but I hope it passes so maybe it will produce action across the state.”

As the talking heads on cable news like to say, there’s a lot there to unpack.  I’ve emailed Ms. Godwin and asked her to expand on her comments, but at this writing I have not heard back from her.

Let’s start with “we don’t get anything from Atlanta.”

That’s nonsense.

The reality, probably not fully appreciated in any region of the state, is that Metro Atlanta has been subsidizing the rest of the state — and South Georgia in particular — for decades.

The Fiscal Research Center at Georgia State University took a mind-numbingly deep dive into this issue nearly a decade ago and found, basically, that as of 2004 (the most recent year for which the author could get comprehensive data) the 10 core Metro Atlanta counties generated 51 percent of state government revenues and consumed only 37 percent of the state’s expenditures, leaving the rest for the other 149 counties.

That’s very much in line with my own Trouble in God’s Country (TIGC) research.  Working with federal IRS data that’s available online, I found that in 2013 the 12 counties I classify as Metro Atlanta incurred right at two-thirds of the state’s federal tax liability — $20.4 billion versus $10.6 billion for the other 147 counties – while consuming, to cite just one example, only about a third of the state’s Medicaid expenses. And that was with less than half the population: 4.65 million people in Metro Atlanta versus 5.34 million in the other 147 counties.

Let’s narrow that focus to South Georgia. Working with that same 2013 data, we find that the 56 counties that make up my TIGC South Georgia region incurred about $1.7 billion in 2013 federal income tax liability, or about 5.5 percent of the state’s total.  At the same time, it consumed about 17.2 percent of the state’s Medicaid benefits.  The level of subsidy implied by these numbers should cause local leaders to pause before they start complaining about Atlanta not doing anything for them.

Truth is, South Georgia (and for that matter most of rural Georgia) is in a world of hurt. In some respects these areas are literally dying, and the breadth and scope of the problems afflicting just about everything from the gnat line south demand some sort of comprehensive solution.

I’ve touched on economics in this piece, but I could make parallel cases using educational and healthcare data.

South Georgia is the least educated and least healthy region of the state, and those facts translate into both an inability to support itself and a dependency on public support for Medicaid and other services.

Atlanta will have to be involved — both in the form of state-driven remedies and as a source of necessary funding. The longer the problems go untended, the bigger — and more expensive — they will become.

The real problem for Ms. Godwin and South Georgia is that these societal and fiscal problems are coming to a head just as their worst political nightmares are also coming true.

For all of Georgia’s history — up until right about now — rural Georgia ruled the political roost. Rural areas generally were smart enough to elect wily young politicians to the legislature and leave them in place to hold Atlanta at bay.

But that’s changing.

By my count, just under half of the current House and Senate districts lie partly or wholly within my TIGC 12-county Metro Atlanta. With the next census and reapportionment, political power will concentrate even further in Metro Atlanta, probably giving it a majority of the legislature.

South Georgia can forget about ever again electing a governor.

What this means is that the political powers who will soon hold virtually all the purse strings may soon be asking why they should be diverting tax dollars generated in Metro Atlanta —which has its own problems — to South Georgia.

Given that reality, South Georgia probably needs a better strategy than demanding “action” and “attention” by threatening to secede.

Who knows? We might take you up on it.

© Trouble in God’s Country 2018

 

R.I.P., House Bill 887. We hardly knew ye.

Well, that didn’t take long.

House Bill 887, the Georgia Communications Services Tax Act, seems to have pretty much crashed and burned within days of being introduced, per today’s AJC.

From the story, by state capitol reporter Mark Niesse:

What’s left of the legislation is a policy for rural internet expansion without any funding.

The latest version of HB 887, which shrunk from 46 pages to 16 pages Thursday, would allow local electric membership corporations to provide internet services, reduce fees EMCs can charge for internet providers to use their poles and set a policy for rural communities to qualify for potential future grant funding.

This is probably a better starting point for the rural broadband discussion anyway.  More news as it develops.

 

 

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.

The rural broadband train arrives at the Gold Dome. Grab your wallet.

Last May I was asked to present some of my Trouble in God’s Country research to the opening session of the House Rural Development Council down in Tifton.  The first question I got after completing my presentation was about something I hadn’t even touched on – the idea of running broadband to rural Georgia.  The next morning the legislators heard four presentations about rural broadband.  It was clear even then that the rural broadband train was being stoked up and prepped for a high-speed run to the Gold Dome.

It pulled into the State Capitol last week in the form of House Bill 887, aka the Georgia Communications Services Tax Act.  I first heard about it from Bill Torpy, The Atlanta Journal-Constitution’s “At-Large” columnist.  Torpy is an occasional reader of my TIGC blog who also tends to get a little worked up when the state government siphons money out of Metro Atlanta to fund cockamamie schemes in, as he puts it, the boonies.  He called to talk about it and get my take for a column that ran in Sunday’s paper.

He’s not wrong about Metro Atlanta getting hosed, of course; it was ever thus – although H.B. 887 may constitute the most audacious attempt to fund a rural boondoggle with Metro Atlanta tax dollars since Sonny Perdue’s “Go Fish Center” in Houston County.  My admittedly unkind assessment is that Metro Atlantans are now being expected to sit in grid-locked traffic so that Donald Trump’s South Georgia supporters can get faster downloads of old Stormy Daniels videos.

H.B. 887 is a beast of a bill.  It’s 45 pages long and has a ton of moving parts.  The basic funding mechanism calls for slapping a new four percent sales tax on a whole slew of communications products and services – apparently including premium streaming services like Netflix and Amazon Prime – to help pay for rural broadband.  Because the vast majority of those subscriptions and services are in areas that already have high-speed internet (e.g., Metro Atlanta), their taxpayers will be footing most of the bill.

How would that work?  Well, another component of the bill is something called the “Georgia Reverse Auction Broadband Deployment Program.”  This is a scheme our leaders cooked up to pay telecom and cable companies to run broadband technologies throughout rural Georgia.  I’m guessing it’s called a “reverse auction” because ordinarily governments auction the right to use right-of-way or wireless spectrum to serve specific areas to companies that are in that business.  Under H.B. 887, our state government would use largely urban tax dollars to pay companies like AT&T, Verizon, Comcast and no doubt others to deploy fiber optic cable and other high-speed broadband technologies to areas they won’t serve on their own.

With the new tax revenues, though, the pot is obviously right.  One tip-off is that, by my count, the telecom and cable industries are now flooding the zone at the State Capitol with more than three dozen lobbyists.

What kind of money are we talking about here?  Well, let’s do some rough math.  At last May’s House Rural Development Council, Blake Doss of the House Budget and Research Office gave the legislators a presentation and told them that an estimated 626,070 rural Georgians don’t have access to what the Federal Communications Commission (FCC) defines as broadband: 25 megabits per second of download speed and 3 MBS upload (more about this below).

Doss also told the legislators it could cost up to $40,000 per mile to run fiber optic cable “in rugged areas.”  He never got around to saying how many miles of cable would need to be run, but we can swag that.

I’m working with five-year-old Georgia Department of Transportation (GDOT) data here, but these numbers don’t change much in that amount of time.  I find just under 800,000 people living in the unincorporated areas of 85 largely rural counties in Middle and South Georgia (never mind the small cities and towns).  Those same areas, according to the GDOT data, were covered by 36,285 miles of road.  For the sake of discussion, let’s be charitable and assume that half of those folks already have access to broadband and that only about 400,000 don’t.

Let’s also assume a 50 percent split in road miles – that the 400,000 unserved rural Georgians south of the gnat line live on about 18,000 miles of road.  Let’s also assume that Mr. Doss’s $40,000-a-mile estimate is high and that it’s really only $30,000.  Do the math and, conservatively, you’re looking at more than half-a-billion dollars to wire rural Middle and South Georgia.

So, real money.  More than Medicaid Expansion money.  In the general vicinity of Port of Savannah money.

Now, taxpayers won’t be picking up the whole tab.  As proposed, the aforementioned “reverse auction” program calls for telecom providers interested in wiring rural Georgia to bid for the rights in a given area, with what amounts to the high bid being a key criteria for selection.  Which means they’ll have some skin in the game.  Which means they’ll need a return on the investment.  Which is going to be tough, even with a big state subsidy.

Let’s use Early County, hard on the Alabama line down in Southwest Georgia, to flesh out an example.  H.B. 887 calls for pouring money into “unserved” areas first (more about which in a later post), and I’m pretty sure Early County qualifies.  Early County is home to right at 11,000 people who live in just under 5,000 homes strung out along 560 miles of road (including incorporated and unincorporated areas).  Even at my reduced estimate of $30,000 a mile, that’s about $16.8 million to wire Early County for broadband, or about $3,400 per house.

Even if the telecom provider that wins the reverse auction to serve Early County puts up only half the capital, that’s still a big investment it will have to recover.  Let’s round the telecom provider’s share of the capital investment down to $8 million.  If they sign up every single household in Early County, that’s about $1,700 in capital costs, per subscriber, the company has to recoup before it can begin to make money.

Which brings us to one of two final problems with H.B. 887 that we’ll deal with today.  First, the broadband as defined in this legislation ain’t all that broad – 10 MBS on the download and 1 MBS on the upload.  The current FCC definition of broadband is 25 MBS up and 3 MBS down.  Full gigabit service – 1,000 MBS – is now available throughout much of Atlanta.  Scanning the web, I couldn’t even find a 10/1 offering.  That’s your granddaddy’s broadband – think DSL with a shot of espresso.

Which brings us to the second and final issue we’ll deal with today.  H.B. 887 requires the vendors not to charge their new rural customers any more than they charge customers in other parts of the state for “the same or similar services.”  AT&T’s full gig service – 1,000 MBS on the download – costs $80 a month in Atlanta; I found an Xfinity 25 MBS offering for $19.99 a month, or less than a buck a megabit.  There’s a lot of wiggle room in “same or similar,” so let’s say the providers can get away with charging the folks in Early County $20 a month for 10/1 service.  At that rate, with all 5,000 homes signed up, they’ll get their capital back in just over seven years.

As I said above, this is a swag and no doubt flawed.  Maybe I’m missing some puts and takes that’d help this make more business sense.  I sure hope so.  Because H.B. 887 is pulling out of the station, and it sure looks like we’re all about to get taken for a ride.

(Up Next: The real problem with House Bill 887.)

Revisiting Georgia’s Title Ad Valorem Tax System: A billion-dollar raid on local government treasuries

By Charles Hayslett

(Author’s Note: This is the first of at least two and probably three pieces I’m writing on the impact on local governments of Georgia’s transition from a traditional sales-and-property tax system of taxing motor vehicles to a complicated new “title ad valorem tax” system.  This is an overview and stage-setter; deeper dives into regional and county-level impacts will follow.)

Think of this as a political cold case, an opportunity to revisit the scene of an old legislative crime five years after the fact and assess the violence with fresh eyes.  Our case today is a bill passed by the Georgia General Assembly in 2012.  Known officially as House Bill 386, this measure was widely ballyhooed as “tax reform.”  This alone should have been evidence enough that the General Assembly was up to no good.  Further evidence lies in the timing.  The 56-page bill was shared with members of a specially-appointed House-Senate committee on taxation a scant 10 days before the 2012 session was scheduled to end.  When then-House Minority Leader (and current Democratic gubernatorial candidate) Stacey Abrams had the temerity to ask about fiscal models that had been used to gauge the financial impact of HB 386’s provisions, then-House Ways and Means Committee Chairman Mickey Channell “responded curtly,” according to one report, that “we don’t have that available right now.”

Not to worry.  The very next day HB 386 was approved overwhelmingly by the full House of Representatives (only nine members, all Democrats, mustered the nerve to vote against it; Abrams wasn’t one of them) and immediately transmitted to the Senate, which passed it unanimously two days later.  Less than a hundred hours after it rolled off the legislative printing press, this 2,000-line bill was out of the General Assembly and on its way to Governor Nathan Deal, who called it “good news” and said: “It means our state is more competitive and is a state where we can grow jobs.”

Revisiting HB 386 five years later is a little like going back to the scene of a massacre and discovering that nobody bothered to remove all the bodies, let alone mop up the blood.  The joint House-Senate taxation committee was supposed to be following up on the work of a 2010 Special Council on Tax Reform and Fairness for Georgians.  Created by state law, the Council was headed by former Atlanta Olympics czar A.D. Frazier and made up of Frazier and nine other well-respected business leaders and actual economists.  This group produced a thoughtful 34-page report that proposed pretty reasonable changes to the full range of taxes imposed by the state of Georgia.

Those recommendations were, naturally, largely ignored.  Instead, the leaders of the joint House-Senate tax committee ginned up a grab-bag of goodies for a lot of the usual suspects, including agricultural equipment retailers and Delta Air Lines.  But all that didn’t get much media attention, thanks to what one report described as the “wham-bam-thank-you-ma’am” means by which the legislation was rammed through the General Assembly.  Instead, the bill’s legislative champions focused on the lead section of the bill, which overhauled the way motor vehicles are taxed in Georgia, and so did the press.

For now, so will we.  To cut to the chase, this section of the bill alone amounted to a massive raid on local government treasuries by state government.  Working with Georgia Department of Revenue data detailed in a recent report by Georgia State University’s Fiscal Research Center, it’s now clear that this one provision of HB 386 shifted something on the order a billion dollars in motor vehicle taxes from Georgia’s cities, counties and school systems to the state treasury between 2014 and 2016 alone.  Once 2017 numbers are in, that cumulative total will almost certainly rise even further.

Here’s how it worked.  Before HB 386, Georgians paid two types of taxes on their motor vehicles – a sales tax at the time of purchase and then an ad valorem (or property) tax every year thereafter.  These two taxes were important sources of revenue for Georgia’s state and local governments.  The sales tax, paid at the time of purchase, was divided between the state and local governments; the state got its 4 percent and the counties got whatever their local sales tax was set at – generally between 2 and 4 percent.  In subsequent years, the counties collected the ad valorem taxes and divided the proceeds three ways amongst themselves and local municipal governments and school systems.  As motor vehicles aged, these ad valorem taxes declined.

It was a tried and true system, but former House Speaker Glenn Richardson (R-Douglasville) had begun to rail some years before about the fact that these ad valorem taxes came due in the month in which the motor vehicle owner was born.  He complained bitterly that this amounted to a “birthday tax” on hapless Georgians and set out to do away with it.  Richardson himself would leave office in disgrace a year or so afterward, but killing the birthday tax for some reason remained a cause celebre among House Republicans and became a key rallying cry in support of HB 386.

In place of the old sales-and-property tax system and its evil birthday tax, they unveiled what they called the Title Ad Valorem Tax.  Now known as TAVT, this is a convoluted Frankenstein monster of a system that appears (fortunately for the rest of America) to be unique to the Great State of Georgia.  (I’ve Googled it and called everybody I can think of to call, and I can’t find anybody who’s aware of anything like it anywhere else in the country.)

Basically, it functions like a sales tax that is paid at the time of purchase.  When it first went into effect, the new TAVT tax was set at 6.5 percent of the cost of the vehicle and the proceeds were split between the state and the county; initially, under HB 386, the state got 57 percent of that 6.5 percent and the local county got the other 43 percent.  Since that first year the rate has increased, first to 6.75 percent and now to 7 percent (where it will likely stay) and the split (again, as provided for in the legislation) has been shifting in favor of the local governments.  As of 2016, that 7 percent tax was being split 53.5 percent-to-46.5 percent in favor of the state.  Over time, the law calls for the split to shift incrementally in favor of the local governments.

That was one of two major elements to the HB 386 overhaul of the way the state taxes motor vehicles.  The other was that the state began taxing two new categories of motor vehicles: casual sales between individuals (this was one of the few Special Council recommendations that survived the legislative shredder), and motor vehicles that are moved into the state.  Bottom line, the TAVT section of HB 386 did away with annual ad valorem taxes, sought to replace that lost revenue with the new “title” taxes on casual sales and motor vehicles moved in from out of state, and changed the way the overall pie was carved up.

By my arithmetic, that trade-off has so far turned out to be about a wash – maybe even a little bit of an overall money-loser.  Under the new TAVT, actual total motor vehicle revenue for the state and local government combined has grown from $1.67 billion in 2012 to $2.01 billion in 2016.  If the old system had remained in place and the state and local tax streams had continued to increase at their respective 2010-2012 growth rates, total revenues for 2016 would have hit $2.05 billion.

While much of the debate that surrounded HB 386 has been lost in the political fog that usually envelops the State Capitol, various legislators, lobbyists and policy wonks tell me there was a lot of discussion about the need to “keep local governments whole” – at least over the long haul.  At that, HB 386 has so far failed miserably.

The table below (using DOR data drawn from the GSU Fiscal Research Center report) compares actual motor vehicle revenues collected by the state and local governments with (for the years 2014 through 2016) what they would have collected if their revenues had been allowed to continue to grow at their 2010-2012 growth rates, which averaged 3.7 percent per year for state government and 5.9 percent per year for local governments.  (2013 was omitted from the Fiscal Research Center report because it was a transition year.)

  State Government Actuals for all years shown Local Government Actuals for all years shown State Government motor vehicle revenue actuals for 2010-2012 and projections for 2012-2014 @ 2010-2012 growth rate Local Government motor vehicle revenue actuals for 2010-2012 and projections for 2012-2014 @ 2010-2012 growth rate
2010 $472,850,810 $1,040,287,022 $472,850,810 $1,040,287,022
2011 $516,340,012 $1,120,536,551 $516,340,012 $1,120,536,551
2012 $506,622,862 $1,165,640,024 $506,622,862 $1,165,640,024
2014 $787,251,834 $1,164,914,899  $    544,806,520  $        1,307,243,140
2015 $899,534,821 $1,123,206,907  $    564,964,362  $        1,384,370,485
2016 $1,018,812,824 $993,062,894  $    585,868,043  $        1,466,048,344
2014-2016 Totals $2,705,599,479 $3,281,184,700 $1,695,638,925 $4,157,661,968

The two left-hand columns show actual state and local government motor vehicle revenue totals for the years shown, as reported in the GSU Fiscal Research Center report.  The two right-hand columns repeat the actual data for 2010 through 2012 and show what the state and local motor vehicle revenues would have been if the old sales-and-property tax system had been left in place and state and local recent growth rates had continued.

Bottom line, the state government’s actual revenues for the period 2014-2016 are just over a billion dollars higher than they would have under the old system and at the old growth rate, while local governments are down a cumulative $876 million.

In a follow-up post soon, I’ll take a deeper dive into how TAVT affected counties in various parts of the state.  Spoiler alert: Rural counties got screwed the worst.