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Posts tagged ‘Georgia Department of Economic Development’

Apr 28

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Chapter III in my ongoing post-mortem of Georgia’s PCI performance from 1980-2020

Late last year, I posted two pieces about Georgia’s per capita income (PCI) performance.  I hadn’t intended to do that.  My original objective had been to take a quick look at a new release of 2020 PCI data from the U.S. Bureau of Economic Analysis (BEA), knock out a quick one-off, and move on. 

But one thing I always try to do, especially when I’m working with a national dataset, is put Georgia’s numbers into a national context.  When I did that with this latest batch of BEA data, I was surprised to find that Georgia had more people and counties at the bottom of the national PCI pile than any other state in the nation.

The straight blue line at the 100% mark represents the national average for per capita income (PCI). The orange line represents Georgia’s performance relative to that national average, based on data from the U.S. Bureau of Economic Analysis (BEA).

That became the lede of the first piece.  It also got my curiosity up, and I started backtracking through 50 years of BEA data to see if I could figure out what was happening.  That resulted in the discovery of what I described, in the second piece, as Georgia’s 40-year PCI roller-coaster ride.  The state made massive, almost unmatched gains during the final 20 years of the last century, then surrendered all those gains during the early part of this century.

As a long-ago political journalist (and now an aging political junkie), I couldn’t help but notice how the state’s PCI roller-coaster ride matched up against the state’s political timescale.  All the gains took place under Democratic governors; all the losses followed under Republicans.  I deliberately stopped short of ascribing credit or blame (and still do), but the pattern was (and still is) difficult to ignore.

The political question aside, I began to think the rise and fall of Georgia’s PCI trendlines is a significant part of the overall TIGC story — maybe a key driver in fueling the ongoing divide between urban and rural Georgia and, especially, Metro Atlanta and the rest of the state. I’ve since come to view the story as something of an economics and maybe political cold case, and I’ve spent an embarrassing amount of time researching various angles over the past few months (which is one reason I haven’t posted much lately).

Among other things, I began to pick the brains of various contacts who moved in political and economic development circles during that 40-year span; found and plowed through a couple of dozen relevant reports and articles, and took several deep dives into other pots of economic data for the 40-year period.

The result of that research is a couple of binders full of material and several storylines that are tough to bring together in a single piece and would be too long for a blog post even if I did. As a result, I’ve decided to dribble it out in a series of brain dumps that should, if nothing else, help me clear my head so that I can move on to other subjects (several of which have been stacking up over the past couple of months).

Brain Dump No. 1 follows.

———-

One of the first things I learned in my research is that the 40-year PCI roller-coaster ride I reported on in December wasn’t exactly breaking news.

It turns out that the Fiscal Research Center (FRC) at Georgia State University had been monitoring the same metrics (and others) for a while. In September 2013, the FRC published a 26-page report by Professor David L. Sjoquist that, among other findings, found essentially the same roller-coaster pattern I did late last year.

(I say “essentially” because there appear to be some very minor differences in some of the data Professor Sjoquist and his team found in 2013 versus what I found late last year.  I suspect these differences owe to periodic revisions and refinements BEA (which was also Sjoquist’s source) makes to its data.)

The Sjoquist report looked at population, employment, and income trends and noted, broadly, that the state’s growth rates appeared to be slowing.  It also mused about various potential causes for these trends, including poor public schools, the loss of jobs to other countries, bad traffic, even a “leadership vacuum” in the business community (which had indeed been undergoing a transition from an era dominated by homegrown barons like Robert Woodruff, Mills B. Lane and Tom Cousins to a new generation of imported CEOs who headed a wave of new Fortune 500 companies putting down stakes in Metro Atlanta). 

The closest it came to pondering the efforts of the state’s gubernatorial administrations was this bullet point in a section of the report focused on employment trends:

“Georgia may be pursuing the wrong economic development strategy, which currently seems to be focused on providing tax incentives. Perhaps a strategy that focused more on providing a better labor force, infrastructure, and amenities would result in greater net job growth.”

Nor did the FRC take note of the fact that the wind had gone out of the state’s economic sails only after the GOP took over the state capitol.  And, again, that may indeed have been coincidental.  Georgia’s economy was red hot through much of the 1980s and ‘90s, and nothing lasts forever. At least one important figure did seem to think gubernatorial focus was relevant to the state’s economic focus, however.

George Berry, who served as commissioner of the Department of Industry, Trade & Tourism (now Economic Development) under Governor Joe Frank Harris during the 1980s, put a bright spotlight on PCI in a guest column for Georgia Trend magazine in January 2011. Governor Sonny Perdue, the state’s first GOP governor in a century, was leaving office and his successor, Republican Nathan Deal, was about to begin his first term. 

In that piece, Berry wrote:

“As Gov. Nathan Deal begins his administration, he would do well to consider the over-arching accomplishment that defines Georgia’s advancement over the last half century: the progress we have made toward economic parity with the rest of the nation.

“That progress can be best defined by comparing the per capita income of Georgians to that of citizens of other states.

“For decades Georgians lagged in this elemental measure.  As late as the onset of World War II, we were barely at 60 percent of the national average per capita income.  This is not an abstract but rather an intensely personal statistic.  It measures how much education one can afford, how much healthcare one receives, whether one can take his children to a dentist and even how many culturally enriching experiences one can have.”

Berry concluded his column with this: “If our new governor can improve this vital statistic, he will be assured of a successful administration.  Because it is a measure easily calculated, everyone can keep score.  It is in all of our best interests that Gov. Deal be the one to celebrate that day when Georgia finally achieves 100 percent of the national average per capita income.”

(I wrote about Berry in this post nearly a year ago, and I’ll have more to say about his focus on PCI in another of these brain dumps.)

As things worked out, Georgia’s PCI performance under Deal was basically flat.  It gained a little ground in 2011, suffered a two-point drop in 2012, and then made slow but steady progress until the end of Deal’s second term in 2018.  At that point, Georgia’s average PCI stood at 86.7 percent of the national average; in Governor Brian Kemp’s first two years in office, that number ticked up ever-so-slightly to 87.0 percent – just under the 87.1 percent figure the state posted at the end of Joe Frank Harris’s first year in office.

Thus endeth Brain Dump No. 1.

Watch this space.

               

May 11

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George Berry’s ‘crescent of poverty’ now an economic and political conundrum for Georgia Republicans

In the summer of 1969, a Hawkinsville, Ga., state legislator named John Henry Anderson opined to his hometown newspaper that rural Georgia was subsidizing the City of Atlanta, the state’s capital and largest municipality.

That news item somehow caught the attention of Ivan Allen, Jr., then mayor of Atlanta, and he was not pleased. He fired off instructions to the city’s Finance Department to develop a response to Representative Anderson.

The task fell to a young accountant by the name of George J. Berry. Berry dropped everything else he was working on and spent the next week researching and drafting a single-spaced, five-page response to Representative Anderson.

Berry’s recollection — passed along to me in an interview several years ago — was that Mayor Allen signed the letter without a single change. The Berry-drafted, Allen-signed letter documented that Fulton County taxpayers paid more than twice as much per return in state income taxes than the residents of Anderson’s Pulaski County and more than twice as much per capita in state sales taxes. At the same time, the letter said, Pulaski County received $324.46 per pupil in state education funding versus $267.32 that went to Fulton County.

“I would recommend to you a close examination of these facts,” the letter said, “after which it would require a fertile imagination indeed to state that “rural Georgia supports Atlanta”.”

That was a half-century ago, and much has changed in that time. Berry, of course, went on to have a storied career as arguably the most accomplished public-sector administrator in Georgia history. He served as the City of Atlanta’s chief administrative officer under Mayor Sam Massell and airport commissioner under Mayors Maynard Jackson and Andrew Young (overseeing a massive expansion of the “world’s busiest airport” in the late 1970s and early ’80s). He ran the Georgia Department of Industry, Trade & Tourism under Governor Joe Frank Harris in the 1980s and was tapped by Governor Zell Miller to serve as chairman of the Metropolitan Atlanta Olympic Games Authority, which oversaw the city’s successful bid for the 1996 Olympics.

It was primarily in connection with his role at Industry, Trade & Tourism that I reached out to Berry in 2016. The notion of the Two Georgias was relatively new when he was serving as the state’s chief economic developer, and he told me it consumed no small amount of his time. Berry said he “struggled with this issue” but “never came up with an answer for what I called ‘crescent of poverty,'” which he described as covering much of south central and southwest Georgia. “I was not successful at all in decoding the forces” that produced the Two Georgias, he said.

Berry, who passed away in 2019, took no solace in the fact that his successors at what is now called the Georgia Department of Economic Development have made little if any progress with the Two Georgias problem. Berry’s “crescent of poverty” has expanded to include all but a handful of the 100-plus counties south of the gnat line.

Much of my TIGC work has been focused, after a fashion, on doing exactly the kind of analysis Berry did for Mayor Allen. Sadly, the Georgia Department of Revenue made that impossible several years ago when it simply, and inexplicably, stopped reporting county-level income tax data in its annual report, thereby eliminating one of the most useful data points it had been producing for decades.

Fortunately, the federal government’s Internal Revenue Service continues to report county-level data for federal taxes, and, if that’s any guide, the Fulton-Pulaski gap has widened to nearly three-to-one per return in the last half-century. In 2018, according to the IRS, Fulton County’s income tax liability was $29,922 per return versus $10,442 for Pulaski; the per capita ratio was more than five-to-one.

My purpose here is not to pick on Pulaski County. Indeed, it’s doing better than many of Georgia’s rural counties. But any study of the Two Georgias problem gets around sooner or later to an examination not just of various economic, education, and health rankings, but to the matter of taxes paid and services consumed. If anything, that kind of data brings the state’s Two Georgias problem — and the gulf between the state’s haves and have-nots — into sharper and more alarming relief.

To provide one limited example, I’ve recently analyzed county-level consumption of Medicaid, Peachcare and Food Stamp spending and compared it to county-level federal tax liabilities for 2018 (the last year for which IRS data is available). This table summarizes the data for the five TIGC regions — 12 counties in Metro Atlanta, seven in Coastal Georgia, 43 in Middle Georgia, 41 in North Georgia and 56 in interior South Georgia.

TIGC’s Metro Atlanta region, with 48 percent of the state’s population, generated 68 percent of the state’s 2018 federal tax liability while using 39 percent of the federal share of Medicaid, Peachcare and Food Stamp spending in the state. At the other end of the regional spectrum, the 56-county South Georgia region, with 11 percent of the state’s population, generated only five percent of the state’s federal income tax liability and used 16 percent of the Medicaid, Peachcare and Food Stamp spending. Put another way, it took 82.5 percent of South Georgia’s federal tax obligation to cover its Medicaid, Peachcare and Food Stamp costs. For Metro Atlanta, the comparable figure was only 13.2 percent.

This interactive map shows the percentage of each county’s 2018 federal income tax liability required to cover the federal share of its Medicaid, Peachcare and Food Stamp costs.

This map illustrates the percentage of each county’s 2018 federal taxes required to cover the federal share of its Medicaid, Peachcare and Food Stamp costs for that year. The darker the shading, the higher the percentage.

The gap between individual counties at the very top and bottom of this analysis is even more stunning. Forty-seven counties couldn’t cover their share of these social service costs in 2018. At the bottom of the pile were two southwesst Georgia neighbors, Calhoun and Miller counties, whose Medicaid, Peachcare and Food Stamp costs amounted, respectively, to 238.6 percent and 219.5 percent of their federal income tax liabilities.

At the top were Forsyth and Oconee counties (which typically vie for the No. 1 spot in every ranking I’ve identified or developed). Forsyth County’s public healthcare and food stamp costs took only 3.1 percent of its federal tax liability; Oconee County, 4.3 percent.

If the challenge over the course of Berry’s career — from his days as a young City Hall numbers-cruncher to his stewardship of the state’s economic development effort — was difficult, it has grown exponentially more vexing in the decades since then.

What was once largely an economic development challenge has now morphed into a much more complex challenge with cultural and political dimensions. Throughout Berry’s career, Democrats dominated state politics, overwhelmingly for the most part. Republicans were only beginning to rise to power as he left the public stage. Initially the GOP staked its claim largely in Metro Atlanta, the most economically vibrant part of the state, with traditional Republican policy arguments that focused on support for free enterprise, low taxes and limited government. Democrats were increasingly dependent on rural Georgia.

Since then, the Democratic Party’s comeback strategy has been built heavily around Georgia’s growing Black vote, especially in urban areas. As that evolution has unfolded, rural whites have been drawn increasingly — indeed, overwhelmingly — to a Republican Party focused on religious and cultural issues.

The result is that today the two parties have basically swapped geographic territories, but Republicans find themselves faced with the far more difficult task of trying to serve — and maintain their political grip on — two profoundly different tribes. The party’s exurban territories — in counties like Forsyth, Oconee, Cherokee and others — are literally among the most economically prosperous, best educated and least dependent on government resources in the nation. After covering its 2018 Medicaid, Peachcare and Food Stamp costs, Forsyth County alone left $1.5 billion-with-a-b on the federal table.

From the gnat line south, however, the GOP’s rural territory is devolving into third world status. That includes the two most Republican counties in the state, Brantley and Glascock, which, respectively, gave Trump 90.2 and 89.6 percent of their 2020 votes. They also both came up short in covering their 2018 public healthcare and Food Stamp costs — Brantley by more than $1 million, Glascock by $1.6 million.

The two counties were among 48 Middle and South Georgia counties with populations of fewer than 20,000 people that went for Trump, most of them heavily. Combined, their Medicaid, Peachcare and Food Stamp costs burned up 96.6 percent of the federal taxes they owed — $622 million out of $643.6 million.

Republicans, then, have inherited Berry’s “crescent of poverty” not just as an economic development challenge, but as a political conundrum. Their long-term political survival in those areas may well depend on solving the economic development problem that vexed George Berry and all his successors. I’m sure Berry would wish them well, but I doubt he’d be very optimistic.

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