Program to spur business development gets a second life
Republican Gov. Nathan Deal is preparing for the fanfare that will kick off his second term in office. So we thought this would be a good time to take a look back at some of his campaign promises from the first.
Deal built his first campaign for governor on a few simple themes. One of those was a promise to create more jobs in a state hit harder than most by the Great Recession and, particularly, the housing market collapse.
During the 2010 campaign, Deal vowed to create programs to spur business development. Specifically, he said he wanted to establish certified capital companies, also known as CAPCOs, in Georgia.
The concept: Insurance companies operating in Georgia would receive state tax credits to invest in businesses, CAPCOs, that would then invest in small businesses and startups. The hope was these businesses would create jobs.
State lawmakers actually approved a CAPCO program in 2002. But they repealed it two years later before $75 million in planned tax credits could be doled out. Lawmakers said their decision was based on budget concerns and worries about the program's potential effectiveness.
CAPCO programs were controversial. At least a dozen states -- including North Carolina, South Carolina and Nevada -- had rejected calls to create such programs by 2012.
Several others -- including Florida and Colorado -- that previously experimented with CAPCOs had by then taken steps to limit or eliminate their programs.
In Georgia, a CAPCO plan calling for $125 million in tax breaks was revived in 2011 but died on the last day of the legislative session.
As an alternative, in 2013, the General Assembly passed and Deal signed legislation creating a program called Invest Georgia.
This program will "serve similar aims," Brian Robinson, Deal's spokesman told PolitiFact on Tuesday.
"It will provide money for startups and such," he said in an email.
Wesley Tharpe, a policy analyst with the left-leaning Georgia Budget & Policy Institute, said Invest Georgia is "better designed than CAPCO, which he called a "flawed model" relying on "expensive tax credits."
Invest Georgia is based on "some promising policies from other states, Tharpe said.
It is set up to be funded through the annual budget process -- rather than through tax credits, Tharpe said.
That should make the program "more accountable to both lawmakers and the public," he said.
The University System has set aside $10 million in its current year's budget to get the program off the ground, and the longterm objective is to have $100 million within fiv eyears to invest in starting or expanding companies.
Deal promised to set up a program to spur economic development, specifically through a CAPCO program. But there were reservations about this investment of taxpayer money.
Some normally skeptical voices said the approved alternative, Invest Georgia, could achieve the same goal with greater accountability to legislators and the public.
For that reason, we rate this Promise Kept.
Nathan Deal campaign website
Deal studying business growth idea
Nathan Deal successfully ran for governor in 2010 on a few simple themes -- and one of them is proving difficult to achieve.
Create more jobs.
As Georgia struggles with an unemployment rate that for several years has been higher than the national average, state leaders have been searching for new ways to put more people to work.
During the campaign, Deal vowed to create programs to spur business development. Specifically, he wanted to implement a program called CAPCO, which stands for Certified Capital Company.
So what is CAPCO all about? Insurance companies operating in Georgia would get tax breaks to invest in businesses, CAPCOs, that then invest in small businesses and startups across the state. The hope is that the small businesses create jobs.
State lawmakers introduced legislation earlier this year, Senate Bill 203, to permit CAPCOs in Georgia, but it did not become law. The Legislature is expected to come back to the idea when it convenes next month, The Atlanta Journal-Constitution recently reported.
The thinking varies on whether the CAPCO concept would work in Georgia. Its proponents say it has saved or created thousands of jobs in the state of Texas, the AJC reported. Others contend it"s a program that has helped a few investments and cost some states millions of dollars.
Deal has asked his "competitiveness” council, which advises the governor on economic issues, to vet the CAPCO bill. The legislation may be tweaked if it is passed and sent to the governor.
"The governor supports the program but is committed to getting it right as he moves forward with the General Assembly,” Deal spokesman Brian Robinson told the AJC.
The idea"s supporters in the Legislature appear ready to give SB 203 another try. Deal seems eager to get CAPCO legislation he is happy with on the books, but he has concerns about the current bill, Robinson told us. There"s talk some version of the idea -- although it may not be called CAPCO -- could pass next year. We rate this as a campaign promise that is In The Works.
The Atlanta Journal-Constitution, "CAPCO investment law gets another shot,” Dec. 4, 2011
The Atlanta Journal-Constitution, "Legislators, Deal should make sure CAPCOs goes nowhere," Dec. 5, 2011
Georgia Senate Bill 203
Telephone interview with Deal spokesman Brian Robinson, Dec. 14, 2011