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Posts tagged ‘economic development’

Kemp’s “rural strike team” should be a step in the right direction. We’ll see.

First, props where they’re deserved.  Georgia Governor Brian Kemp actually took a step in the right direction Monday when he told the AJC he’s creating a “rural strike team” to try to stimulate economic development in the state’s dying hinterlands.  He reportedly plans to unveil the details in Swainsboro on Thursday.

Only time will tell whether this is anything more than eyewash and window dressing, but there were a couple of promising hints in the AJC’s story.  One was that he’s bringing together “a half-dozen state departments and higher education agencies” to drive the effort.  That implies a more strategic approach and focus than I’ve seen so far, and one that’s long overdue.  Still, the strike force will have its work cut out for it.

The state of Georgia is quite literally in the process of tearing itself apart along rural and urban lines, and especially between Metro Atlanta and just about everything else from Macon south.  These are not slow-moving trends.  No matter how you come at it – economically, educationally, health-wise, politically – you can pretty much watch the division in real-time.

Take education as an example.  In 1970, according to Census Bureau data, there were fewer than a quarter of a million college graduates in the entire state of Georgia, and slightly more than half of them lived outside Trouble in God’s Country’s 12-county Metro Atlanta region.  Today, the state is home to nearly two million college graduates and 63 percent of them live in Metro Atlanta.

That disparity is only going to grow.  Up until 2011, the 147 counties outside Metro Atlanta sent more freshmen to University System of Georgia (USG) institutions than the 12 Metro Atlanta counties, which is probably what you’d expect.  But in 2011 Metro Atlanta overtook the rest of the state and ever since then it’s been sending significantly more freshmen to USG colleges and universities than the rest of the state combined (see graph at right).

At the state’s two flagship universities, the University of Georgia and Georgia Tech, the gulf is bigger yet.  At Georgia Tech, 75.5 percent of the Fall 2018 in-state freshmen came from Metro Atlanta; at UGA, just over 63 percent of the in-state freshmen came from Metro Atlanta.  By my count, 71 counties, all rural, didn’t send a single high school graduate to Tech in the fall of 2018; at UGA, the same was true of 22 counties.

These differences matter.  Not only do they fuel Metro Atlanta’s outsized economic growth, they drive widening disparities in taxes paid and social services consumed.  With just under half the state’s population, Metro Atlanta in 2016 coughed up nearly two-thirds of the state’s federal taxes while consuming, as examples, about 37 percent of the state’s Medicaid services and about 41 percent of its food stamp benefits.

You can do the math on the other side of that equation.  Oh, okay, I’ll help: the 99 counties that constitute Trouble in God’s Country’s Middle and South Georgia regions don’t even come close to covering their own Medicaid and food stamp costs, let alone anything else.  After a while these kinds of numbers get to be politically untenable.

Some years back, I presented a very early version of my Trouble in God’s Country research to a group made up primarily of legislators.  One of those was House Ways and Means Committee Chairman Mickey Channell, who has since passed away.  “What do you do about it?” he asked.  I didn’t know then and still don’t, at least not entirely.  But I’ve since given it a lot of thought and would offer the following as a running start at an answer:

  • First, the multi-agency approach suggested by Kemp is the right idea — and critical. The state of Georgia arguably has one of the strongest and most sophisticated economic development infrastructures in the nation, but my sense is that its work has been largely siloed and not well integrated with other departments and agencies of state government.  The state’s urban-rural divide and the deterioration in much of rural Georgia constitutes a truly strategic problem.  It’s not an exaggeration to call it an all-hands-on-deck crisis.  In addition to the departments of Economic Development and Community Affairs, the team will have to include high-level engagement from throughout the state’s education bureaucracies and, I’d argue, public health and human services.
  • Start with a realistic evaluation of the state’s various rural areas and recognize that some are more viable than others. Some politicians like to say they want to run government like a business.  In business, if you’re losing money year after year, sooner or later you call it quits.  Under that theory, I can take the governor to 50 or so counties where he ought to turn out the lights and call it a day.  We can’t do that, of course, but it ought to be possible to invest discretionary tax dollars and other public resources in areas that at least have a fighting chance of generating a return, in terms of new growth and economic prosperity.  In other words, resist the normal political temptation to attack the worst problems first; instead, identify the regions that still have a pulse and see if they can be saved.
  • Shore up the regional hub cities first. It’s not just Georgia’s purely rural areas that are in serious decline; a lot of the major regional cities – Macon, Columbus, Augusta, etc. – are suffering various types of distress, and they are vital to rural areas around them.  As a practical matter, it may be too late to do much good for Albany and the rural counties between it and the Alabama line; that entire region of the state is bleeding population and shrinking economically to a degree that may put it beyond near-term salvation.  Figuring out how to strengthen other major hubs in ways that will enable them to better support their rural neighbors should be pretty close to the top of the to-do list for Kemp’s strike force.
  • Challenge the rural areas to compete for the state’s attention and dollars. Hopefully, one of the initiatives that will come out of Kemp’s effort will be a process by which multi-county regions or areas of the state can apply to the state for funding and technical support.  It shouldn’t be entirely on Kemp’s strike force to show up in Enigma, Ga., and say, “We’re from state government and we’re here to help you.”  Rural areas should be required to come forward with a rational vision, demonstrate that they have the leadership capacity to drive a major effort, and put serious skin in the game.  There should be milestones in that process and a credible system for evaluating progress.
  • Bite the political bullet and implement Medicaid Expansion. I should have listed this first but figured Republicans would stop reading right then and there.  Refusing to take advantage of Medicaid Expansion was the major failure of Nathan Deal’s administration and Kemp shows little inclination to do any better.  His attempt at a “waiver” approach (an all but transparent effort to deny Barack Obama any credit for the program) apparently can’t even pass muster in Donald Trump’s Washington.  Meanwhile, rural hospitals continue to close and people continue to die, prematurely and unnecessarily.  Even if Deal, Kemp & Co. are blind to the health benefits of Medicaid Expansion, you’d think they’d see the economic benefits of pumping billions of dollars into rural Georgia.  Maybe all things Obamacare still constitute a third rail of politics for Georgia Republicans, but my hunch is that the radioactivity levels tied to Medicaid Expansion have diminished to a point that it could be a political winner for Kemp – a Nixon-to-China sort of moment.

Again, I don’t know whether Kemp’s ”rural strike force” will prove to be anything more than eyewash and window dressing, but it’s encouraging that he’s taking a stab at the problem.  Hope springs eternal.

(c) Trouble in God’s Country 2019

 

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.