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Posts tagged ‘Georgia’

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

Thanks, Mr. President, for giving us a new way to think about Georgia’s declining regions

By Charles Hayslett

File this under every-cloud-has-a-silver-lining.  President Trump’s characterization of Haiti and various South American and African countries as “shitholes” may have torpedoed a DACA deal, triggered a global diplomatic uproar and made it more likely that the federal government will shut down this weekend.  On the bright side, it also gives us a memorable way to think about the deteriorating counties and communities right here in Georgia.

Now, because I am a nice guy and don’t want to offend my friends in rural Georgia (and especially because my wife is from South Georgia and would not appreciate it), I am going to refrain from personally applying the president’s epithet to our state’s more unfortunate areas.  You’ll just have to use your imagination.

In the wake of the president’s unfortunate description, his surrogates have worked hard to shift the debate from the seemingly racist overtones of Trump’s reported language to a broader discussion about a merit-based approach to immigration.  I’m generalizing here, but they seem to be saying that Trump’s language wasn’t a commentary on the racial make-up of the nations he referenced (overwhelmingly black or brown), but the supposed economic prowess and productivity of their citizens.

I’m happy to take them at their word.  In that context, and by that standard, it seems reasonable to suggest that America has its own share of such areas – specifically, counties and communities that have long been on a downhill slide just about any way you want to measure it: economically, educationally, in terms of health status, etc.  It also seems reasonable to point out that these areas voted overwhelmingly for Donald J. Trump, and to wonder what he would like to do for voters who were among his most ardent supporters – who, indeed, were a large chunk of his base.

To be fair, Trump also won many of the state’s most affluent counties, which also tend to be deeply Republican, including growing suburban and exurban counties like Fayette, Forsyth, Cherokee and Dawson.  But a review of 2016 General Election results suggests Trump owes a large measure of his margin in Georgia to what might indelicately be called the, well, you-know-what vote.

Altogether, Trump carried 127 counties in Georgia.  Of the 4.7 million people living in those counties, 77.1 percent were white and 18.4 percent were black.  Based on the most recent educational attainment data available, they were also home to slightly more high school dropouts than college graduates – 625,808 adults without a high school degree versus 625,161 with at least a bachelor’s degree.  In contrast, the other 32 counties that went for Clinton were home to more than twice as many college graduates than high school dropouts – 1.2 million to 532,000.

That educational disadvantage translates, among other things, into weaker economic output, poorer health and higher healthcare costs.  The 127 Trump counties generated $10.45 billion in 2013 federal taxes (the most recent IRS data I’ve analyzed) versus $20.5 billion from the 32 Clinton counties.  At the same time, while generating basically twice as much in federal taxes, the Clinton counties (home to the larger population) consumed only about 17 percent more in FY2017 Medicaid costs than the Trump counties: $5.03 billion versus $4.3 billion.  One result of that math is that Medicaid patients from the Trump counties cost the state about 2.2 percent more per patient than those in the Clinton counties: $5,136 to $5,026 each.

What’s more, if educational trends are any indication, the economic and health gaps will almost certainly continue to widen.  In the fall of 2016, the University System of Georgia admitted a total of 41,906 students from throughout the state; 23,325 came from the Clinton counties and 18,581 from the Trump counties. 

But those overall numbers actually mask the extent of the differences.  Of the 41,906 students admitted that fall, 11,756 were accepted at the state’s top four research universities – Georgia Tech, the University of Georgia, Georgia State University and Regents University.  Of those, more than twice as many were from the more economically productive Clinton counties than the Trump counties: 8,421 versus 3,335.

An even starker picture emerges when you look at the state’s most economically depressed counties.  The Georgia Department of Community Affairs (DCA) manages the state’s job tax credit program, which is designed to steer businesses and jobs to the state’s poorest counties by offering substantial tax credits for each new job created.  This year, DCA lists 71 counties in its Tier 1 category.  Only 721 students from those counties made it into one of the top four research universities.

And even that number is deceptive.  Of the 71 Tier 1 counties, the only one in Metro Atlanta is Clayton County, which sent 233 high school graduates to one or the other of the research universities.  The other 70 counties split the remaining 488 students.  Ten of those failed to send a single student to one of the top four Georgia schools.

In contrast, Fulton County, whose 5th congressional district Trump once said was in “horrible shape and falling apart,” sent 3,924 students to University System institutions in the fall of 2016, more than all the Trump counties combined; 1,971 of those were selected to one of the top four research universities.  It also generated 8.5 times as much in 2013 federal taxes as it consumed in FY2017 Medicaid benefits (and, of course, it went heavily for Clinton over Trump).

My purpose in writing this is in no way to denigrate Georgia’s poorest and least educated counties, or to in any way re-litigate the 2016 presidential campaign (although I suppose candor requires an acknowledgement that I am no fan of President Trump).  Indeed, I have devoted a fair chunk of the past several years to researching and writing a book aimed at putting a spotlight on the widening divide between Metro Atlanta and the rest of Georgia, especially the state’s poorest areas, and to exploring public policy solutions to the challenges posed.  It’s a tough nut to crack, and there are no easy solutions – either for, well, Georgia’s you-know-what holes, or for the more affluent areas that will inevitably be stuck with the tab. 

In an odd sort of way, President Trump may have performed a useful service where this issue is concerned.  In condemning countries whose emigrants to the United States he obviously sees as unproductive and uneducated drags on the nation’s resources, he has invited what could be a useful discussion about American communities that could be characterized in the same manner.

 

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.