Scrutinizing Georgia’s Deal-Closing Funds

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Click to see the AJC infographic

The Atlanta Journal-Constitution has just published a devastating critique of two deal-closing funds used by Georgia to subsidize companies that are expanding or relocating to the state.

Three reporters–Michael Kanell, Shannon McCaffrey and J. Scott Trubey–spent weeks at the Department of Community Affairs going over thousands of pages of documents relating to a decade of grants awarded by the Regional Economic Business Assistance (REBA) and Economic Development Growth and Expansion (EDGE) funds. The funds are allocated to local development authorities that pay for company-specific needs like new roads or sewer connections.

They found that 42 percent of subsidized companies failed to deliver the full number of promised jobs, but fewer than 4 percent of awarded grants were not distributed or were clawed back as a result of that underperformance. Overall, the paper found, nine out of ten promised jobs were created, but this figure was skewed by the fact that some companies created more jobs than they promised. Some of those firms, however, later closed down or had mass layoffs. Some companies received subsidies even though their financial situations were uncertain (AJC ran a separate article analyzing giveaways to “red flag” companies).

Despite the widespread underperformance, companies “can – and do – escape any penalty,” the article said. Georgia’s generous exemption policy allows companies to create only 80 percent of promised jobs before any penalty applies. Not long ago, the passing grade was 70 percent.

The article comes with an infographic that includes company names, number of promised and actually created jobs, and the subsidy amounts. This is the first public disclosure of REBA recipients; EDGE recipients have been disclosed on the OneGeorgia Authority website, and that data has been incorporated in our Subsidy Tracker.

In states like Georgia, where subsidy disclosure is generally non-existent or minimal, it is often only through such journalistic investigations that the public learns the truth about the state’s economic development practices. We congratulate the AJC on its great job.

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