Remember back 7 or 8 years ago, when lots of folks here in Georgia — mostly but not all well to the right of the political center — could barely contain their glee at the fiscal and economic woes in California?
I recall that theme well. The narrative fed a well-worn but baseless ideological belief: a low-tax, low-service state like Georgia would remain competitive in a serious downturn while big liberal states like California would crash and burn.
It should have been clear to anyone who was actually looking at the data that California was simply ahead of the curve of the recession — and Georgia was behind the curve. And it should have been clear, too, that a state like California with such vast resources and so many thriving metro areas was bound to get its fiscal house in order.
Flash forward to the beginning of 2015 and Georgia has among the highest unemployment rates in the nation, and, even as Atlanta, Savannah, and a few larger metro areas are looking pretty vibrant economically, many counties across the state — especially in the rural areas — are floundering. I’ve remarked consistently on this trend in my City Talk columns in the Savannah Morning News and in numerous posts at Peach Pundit over the past year.
A key problem has been the collapse of government revenues in these smaller counties, which are now struggling to maintain even the most basic infrastructure and have been forced to slash education funding.
The Atlantic now offers perhaps the sharpest journalistic analysis that I’ve seen so far of these trends: What’s Wrong With Georgia? by Alana Semuels.
From the piece:
Georgia, home to Fortune 500 heavyweights such as Home Depot, UPS, and Coca-Cola, had the highest unemployment rate in the nation in August, September, and October. With a November rate of 7.2 percent, the state was narrowly edged out by Mississippi’s 7.3 percent (December statistics won’t come out until mid-January).
This may seem surprising, since Georgia was named the best state to do business in both 2014 and 2013 by Site Selection magazine, largely because of its workforce-training program and low tax rates. Nathan Deal, the state’s GOP governor, handily won reelection in November against Jimmy Carter’s grandson by speaking about Georgia as a job magnet.
But those who follow the state’s economy say the state’s troubling economic figures are directly related to Georgia’s attempts to paint itself as a good state for corporations.
“This is what a state looks like when you have a hands-off, laissez-faire approach to the economy,” said Michael Wald, a former Bureau of Labor Statistics economist in Atlanta. “Georgia is basically a low-wage, low-tax, low-service state, that’s the approach they’ve been taking for a very long time.”
For small counties, many of which have declining or stagnant populations, cuts in funding to essential services will guarantee that 21st century companies will settle elsewhere. There might be some cheap labor in rural Georgia, but many of the workers lack necessary skills and education — and what credible executive wants to raise a family in a place that doesn’t have even halfway well-funded schools, parks, roads, etc.?
Again from the piece:
Georgia was among the first states to cut back the duration of unemployment benefits available to its residents to 18 weeks from 26. The state has slashed $8.3 billion from public-school funding since 2003 and passed eligibility requirements for a state financial-aid program that caused a dramatic decline in the number of students in technical colleges (some of those requirements have since been rolled back).
The state also passed a sweeping tax-reform bill in 2012 that eliminated some sales taxes and broadened exemptions for the agricultural industry that small towns and counties say have wreaked havoc on their revenues. Some counties are seeing unemployment rates that indicate the recession is far from over, including Chattahoochee, with an unemployment rate of 14.4 percent and Telfair, with a jobless rate of 13.3 percent.
Check out this report from the Georgia Municipal Association if you’re interested in the sharp decline in sales tax revenue distributed to local municipalities in 2013, despite general improvement in the economy. Here’s a key graphic from that report:
It’s a lengthy and interesting analysis. Let me also add a note about some recent commentary by Jim Morekis, editor of Connect Savannah, on Facebook. Jim notes that anti-immigrant legislation in Georgia almost certainly drove out some undocumented workers, which decreased both consumer demand and necessary labor, especially in some rural counties.
It looks likely that the 2015 Georgia legislature will be forced to raise the gas tax — and that would be an especially regressive tax that would most hurt two segments: a) the poor and b) people who have no choice to drive long distances to shop or work. So that will be another blow to rural parts of the state that will offset some of the benefits of falling gas prices.