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Tax incentives for luring companies sparking debate

When Columbus-based Aflac announced plans last month to expand its work force by 2,000, Gov. Sonny Perdue took a hit in the Atlanta press for offering too much in incentives to get those jobs.

Last week, when South Carolina landed a scaled-down version of a DaimlerChrysler van plant once sought by Georgia, Democrats complained that he didn't ante up enough to win that competition.

Those two projects renewed a political and philosophical debate over whether and how much Georgia should offer companies in taxpayer-financed incentives either to stay in Georgia or move here.

The $100 million Aflac expansion is the state's biggest business coup since Perdue took office in 2003, topping the $96 million poultry processing plant, hatchery and feed mill Sanderson Farms opened in Moultrie and Adel last August, which eventually is to create 1,700 jobs.

To help convince Aflac to put its new jobs in Georgia, the state offered up five years of tax credits worth $500 per job, Department of Transportation work crews to build roads needed at and around the site and free job training at the local technical college.

The state's chamber of commerce executives and economic development leaders are constantly talking up Georgia's advantages as a place to do business. To hear their spiel, you might think it unnecessary to have to lure companies here with incentives.

But, ironically, it's because of such amenities as Atlanta's transportation hub and the quality of Georgia's university system that states like South Carolina cough up millions of dollars in incentives to recruit businesses, said Perdue spokesman Dan McLagan.

"Incentives, particularly in the Southeast, were created to draw business away from Georgia,'' McLagan said. "We are the desired destination for any company that wants to do business in the South.''

With its neighbors more than willing to offer generous incentives, McLagan said Georgia is forced to pony up to stay competitive.

"Incentives are a part of the economic development game,'' he said.

But Democrats say Perdue isn't playing that game as aggressively as he should, particularly with unemployment on the rise across the state.

According to the federal Bureau of Labor Statistics, Georgia experienced the nation's fourth-largest increase in unemployment (0.7 percent) between October of last year and this October and the second-largest jump in new unemployed (38,200).

Demonstrating the widespread nature of the problem, the state Department of Labor reports that the unemployment rate increased in 139 of Georgia's 159 counties during the same period.

"We have plants that are closing in Georgia,'' said House Minority Leader DuBose Porter, D-Dublin. "We need to do every incentive possible to keep manufacturing jobs here.''

Porter and other Perdue critics cite South Carolina winning the DaimlerChrysler plant as Exhibit A for their case against the governor's incentives policy.

But McLagan said the scaled-down project the Palmetto State is getting is a far cry from the original plant proposal Georgia was working on to bring to a vacant site near Savannah. Instead of a $750 million investment and up to 3,000 jobs, the South Carolina project represents an initial investment of $35 million and 220 jobs.

McLagan said the automaker demanded and got from South Carolina a far more lucrative incentives package than Georgia was willing to give. He said the cost of the incentives per job created didn't add up a good deal for taxpayers.

But Porter said companies like DaimlerChrysler often phase in projects because it helps their bottom lines to spread out their investments. Indeed, that's what South Carolina Gov. Mark Sanford is counting on in predicting that the van plant eventually could grow into an investment of $435 million and 1,800 jobs.

"More and more companies realize ... that phasing in is more economically beneficial to them than one big expansion,'' Porter said. "You've got to pattern your strategy to account for that.''

Perdue, however, is sold on a case-by-case approach to offering incentives.

"Where you have to draw the line is what makes economic sense? When do you get appropriate value for the tax dollar?'' McLagan said. "If it doesn't make financial sense for the state, we're not going to do it.''

Dave Williams is a staff writer for the Gwinnett Daily Post. E-mail him at dave.williams@gwinnettdailypost.com.