Comité Ways & Means de la Cámara de Representantes, 15 de enero de 2026

Transcripción

219 turnos. Seleccione un tiempo para reproducir ese momento del video.

1. 0:00:02

   Believe it.

2. 0:00:03

   You have to turn it off there and back on. It's just anytime it's...

3. 0:00:07

   First time. Okay, there we go. Thank you, David. Welcome everybody. It is, uh, that time. I know not everybody's here. We'll have some come and go. Got, uh, informational only statutory meeting here today to review some of the audits from Senate Bill 6. Um, so we'll call this meeting to order, and I, I believe, uh, Chairman, you're willing to open us up in a word of prayer?

4. 0:00:30

   Yes, sir.

5. 0:00:30

   All right.

6. 0:00:33

   Thank you, Mr. Chairman. If y'all would pray with us. Lord, we do thank you for this great day you've given us. Uh, we thank you for the great state of Georgia, and help us to zero in on things that would benefit our citizens and our state. Uh, we're thankful for the members of this committee and the members in the audience that are so diligent about coming and helping us work together. We ask that you be with our families back home, our children and our grandchildren, keep them safe while we're gone, and bless everything we do in Jesus' name.

7. 0:01:04

   Amen.

8. 0:01:05

   Amen. Thank you. This a very important look back over, uh, some of the things that, uh, have been put in place over the years and what, uh, we may, um, see, uh, with regard to these audits. I, I do wanna thank Matt Taylor and his team for being here today and helping put these together. I'm gonna, uh, recognize you, um, to, to get us started, and I know you have, have a team that worked on this. I... Also, before we get started, we, just so everybody knows, Shay Johns has joined the team.

9. 0:01:40

   She is our intern this year in Ways and Means. So, uh, she's gonna be fantastic. Shay, welcome.

10. 0:01:48

    And our AA down there, uh, Evelyn Hamilton i- is kind of a, a veteran of this building, so sh- she-- or the Capitol Building, and she, she knows, uh, her way around, but we're excited to have her, uh, over at Ways and Means too. She is, she's outstanding. So, uh, Mr. Taylor, uh, your show, sir. Thank you.

11. 0:02:10

    Okay. Uh, mic working's fine? All right. Uh, well, I just wanted to thank everyone for, uh, being here, inviting us to, uh, speak about the, uh, tax incentive evaluations that were completed in '25. Um, so I, I wanted to give just a really quick overview of the state law that, that guides this report process. Uh, this is the... We've done these for four years now. Uh, first year was, um, uh, the, after the passage of Senate Bill 6. Uh, originally under Senate Bill 6, uh, Chairs of Ways and Means and Senate Finance, uh, could request up to five reports each year.

12. 0:02:46

    Uh, the law required these reports to include, uh, net economic activity, uh, state revenue, state expenditures, and the public benefit, if any. Uh, and, and, uh, we were required to contract, uh, for this work. Uh, after an RFP process, we contracted with Georgia Southern, Georgia State University, and the University of Georgia. Um, so then, uh, Senate Bill, uh, 366 passed in '24. Uh, that allows chairs to request up to six reports each.

13. 0:03:17

    Um, it also includes some auto- automatic reviews of sunsetting, uh, uh, tax incentives if they are, they cost more than $20 million. Uh, uh, in addition to the information that was already required to be in these reports, uh, they're supposed to also add things like, has the purpose of the incentive been met, uh, consider other ancillary impacts in comparison to other states. And some of these things were in the, in the reports previously, but, uh, this put it in statute. Um, the Department of Audits is also required, uh, to publish a list of topics on our website, uh, after we get the list, and we collect written comments from interested parties, and that's passed along to the researchers to use while they're doing their analysis.

14. 0:04:00

    So this is the list of the requests that we received from the two committees, uh, this past year. Uh, we got 12 requests, uh, six, uh, from each chamber. We'll, we'll discuss all 12 of them today, or the researchers from the universities will discuss all 12 today. Uh, you'll see, uh, income tax credits there, including several that are related to donations that are not necessarily for economic development purposes primarily. Uh, some sales tax exemptions. Uh, I, I believe that we are up over 40 of these reports in, in the last, uh, four years now.

15. 0:04:33

    Um, so b- before I turn it over to the researchers to discuss those 12, I, I just wanted to, um, briefly describe the, the economic, uh, impact section of the reports. That's what gets talked about a, a great deal. Um, the researchers... Now, I've gone over this in prior years. Some of you may be familiar with it. They, uh, typically use Implan, uh, to determine, uh, certain measures like jobs, labor income, the value added to the economy, and economic output. Um, and you can see in this slide that it does include what is called the ripple effect by, by some people.

16. 0:05:08

    Um, it's the direct companies that benefit their suppliers, and then the employees of the suppliers in those direct companies and how they spend the money that they receive, their wages. Um, and then there's, uh, an, an important point in these reports is often the but-for percentage, uh, this analysis. This is because not all activity that occurs in an industry is associated and results because of the incentive. Um, and this is what this percentage is trying to get at.

17. 0:05:38

    So if, if you think about it, we have a grocery sales tax exemption in, in Georgia. If we did not have that, we would still buy groceries. I mean, it is, we, we would still eat. So, um, if you are evaluating that particular exemption, you are trying to determine how that changes demand and how that changes the economy. So it, it would not be, you would not consider in jobs everybody that works at a grocery store, for instance. So that would be a, a basic example. And, and while we're discussing, uh, the importance of the but-for, I, I wanted to take the opportunity To, um, address the data center report summary that, that many of you probably saw the corrected summary that the Department of Audit sent out yesterday.

18. 0:06:18

    The primary issue with the summary that was originally created was we had not applied the but for percentage to the numbers. So the report from UGA was correct. They had, uh, they, they had assessed, determined the overall impact of the industry. Those are the numbers that we had in the summary. What we should have done at the Department of Audits is applied the thirty percent but for, and so that's what we did. We went back and multiplied those numbers by thirty percent because UGA had determined that thirty percent of the activity was due to the exemption, not one hundred percent.

19. 0:06:58

    So they'll, they'll talk more about that report later. But basically, what these reports are supposed to do is not determine what's going on in an entire industry, but to determine what is being caused by the incentive. And so that's why those numbers changed. But again, the, the report did not change. It was only the, the summary of the report that we created. Um, so let's see. Well, I also wanted to bring up some limitations, uh, to consider with these, these reports.

20. 0:07:30

    Um, so it's not every incentive has a primary purpose of economic development. Uh, I mentioned the grocery sales tax exemption. I mean, that is not passed to, to spur economic development, um, in the same way something like job tax credit may be. Um, and that we have tax credits that we're gonna talk about today that are related to donations, uh, to nonprofit entities, and those may not all have a primary purpose of economic development. Um, so there are other components of these reports that may matter more than things like jobs and labor income. And you'll see some very low numbers for those, but there may be another purpose that those, those credits were created.

21. 0:08:07

    Um, the researchers, uh, attempt to determine if the incentives are accomplishing their purpose as required, but the purpose is not always clearly stated in law. I mean, it rarely is explicitly stated, so it's, it's generally implied. They're trying to determine what, what the purpose of the incentive is. Um, and then, um, another limitation is the, the changes in economic and fiscal activity. Th- th- this is a relatively short period, so it doesn't, it doesn't consider anything like the reputation of the state and long, really long-term decisions that may be made.

22. 0:08:41

    So that's just another consideration, um, that's more specific to the economic, um, aspect. So, s- s- so and now I can turn it over to the, uh, researchers unless-

23. 0:08:55

    Yeah, no, please, please do, Matt. I was just gonna-

24. 0:08:57

    Okay

25. 0:08:57

    ... notify the committee that, you know, we're gonna have another opportunity to take a deeper dive on this. I've talked with Chairman Huffstedler, so, um, I know we start losing some people starting around two o'clock. Uh-

26. 0:09:06

    That's okay

27. 0:09:06

    ... you know, I, I'll be here for as long as it takes you to get through these, but, um, you know, if, if we have some burning questions, please try to get 'em, get 'em out. But, uh, we, we cer- we will have another opportunity to engage on these, uh, later. Thank you.

28. 0:09:20

    Okay. Thank you.

29. 0:09:22

    Thank you.

30. 0:09:22

    You were supposed to do the intro.

31. 0:09:24

    It's okay.

32. 0:09:27

    Good afternoon, everybody. Uh, I am Peter Bluestone with the Georgia State Fiscal Research Center. I'd just like to take a minute and acknowledge my team here who, uh, helped out immensely on all these. It's a lot of work, and, uh, they, they really did a great job, uh, all through the, the year last year. Uh, so if you have any really tough questions, I may look to them to try to backstop me here. All right. So we did, uh, six tax credit evaluations. Um, five of them were fairly similar in that they were income tax, uh, credits, uh, that allowed taxpayers to, uh, donate money to a specific charity, uh, like, uh, foster care, for instance, or the Peach Tax Credit for education.

33. 0:10:11

    Uh, and they would get a deduct-- a, a credit on their income tax. So essentially, it's a shift from going into the state general fund, for instance, and, and instead directly into this charitable organization. Uh, so in, in, in that sense, they're analyzed similarly. Um, the, the mechanisms for how we analyzed the, uh, changes in behavior for taxpayers was similar. Um, they did have different but for, uh, causation estimates.

34. 0:10:42

    Some of them we, we, uh, estimated had, did not change behavior at all. Uh, and some of them we did find changes in behavior. Uh, for a lot of these, the goal is to increase donations or increase funding to these places, such as rural hospitals. Um, and so in, in some of these instance- instances, you'll see that there was a great, and if you looked at the report, you'll see there was a great uptick in rural hospital donations. But what we're concerned about when we're looking at these but for estimates is, is a substitution effect, right?

35. 0:11:16

    Uh, taxpayers could be funding hospitals broadly, uh, in their donation portfolio. Uh, and then they are, are made aware of this new credit, uh, and so they might switch their giving from a formerly unqualified urban hospital in their area now to a rural hospital. Uh, and so we-- that-- and that's a general pattern in these types of analysis, right? Are we seeing a real uptick in donations or are we seeing a substitution from a what, uh, what was formerly an unqualified, uh, provider of services, uh, to now a qualified provider?

36. 0:11:58

    So I'm gonna go through these fairly quickly. There's a lot of detail on these slides. Um, and I'll, I'll just try to hit the highlights. Uh, I'll... The descriptions are fairly similar, uh, in terms of the amount of qualifying, uh, cr-- the amount that qualifies for the credits. Uh, there is one that's slightly different, the employ- the employer-sponsored childcare tax credit. That functions, uh, as differently than the others, um, that's geared towards employers rather than individuals. Uh, and it's a fairly complex credit.

37. 0:12:30

    Um, I'll just say right now that we find due to the complexity of the credit, uh, and the limitations for tax planning, uh, that, that we don't see that, uh, moving the needle in terms of providing additional, uh, childcare options for people. Uh, essentially what we find is that, um, it, it-- employers do participate, but it is limited, uh, and that due to the other options that, uh, employees have available to them, a lot of them prefer to participate in other plans, particularly, uh, flexible spending account plans, which offers them different choices, uh, and they're not just tied down to one, one center.

38. 0:13:13

    Um, so again, we see, you know, the, it, the purpose of that is to encourage employers to provide childcare. Uh, we, we do see that they do that, but we don't see that it changes the behavior of the amount of childcare spending in the state. Again, it's, it's a substitution effect, albeit small. Um, qualified education expense tax credit. Uh, again, the, the purpose of this is not explicitly identified in the statute, but, uh, again, it's likely, uh, to increase access to private schools.

39. 0:13:45

    Uh, and, and in the report, we found that particularly, uh... The, the mic-- Am I standing too close? Maybe a little farther away. Okay. Um, we find that, uh... Stand closer? Okay. That's the perfect spot?

40. 0:14:00

    Yes.

41. 0:14:00

    All right. I'm gonna put my hands down. Maybe that'll keep-- brace me. Um, we, we, we find that, uh, in fact, this, this, uh, program does provide for, uh, more, um, low income and minority participation in private schools. Um, but because of the challenge in estimating the but-for, essentially the switcher rate, I'm sure you all are familiar with that, um, term. Uh, essentially, it's the idea that, you know, does the credit a-actually induce somebody to go to a private school, uh, uh, and without the credit, they wouldn't?

42. 0:14:36

    That, that's something very hard to estimate. Um, there's been a lot of work done in that area, but there's been no conclusive estimates. So for our work, we've-- we-- what we did was we tried to essentially balance the, um, the, the, the switcher rate so that essentially the cost to the state and the benefits of the state even out. Um, and, and that's consistent with other work that's been done in this area, uh, again, because of the difficulty in actually observing the switcher rate.

43. 0:15:08

    Um, you'll find in the report it's roughly sixty percent is the s-switcher rate.

44. 0:15:16

    Um, rural hospital tax credit, um, that's to strengthen the financial stability of rural hospitals. And again, as I mentioned, we did find that there was, uh, certainly increased giving to rural hospitals, and we did find, again, that there is a but-for element here. We, uh, used the, um, location based on Department of Revenue data and, uh, the, um, uh, the, the IRS nine ninety forms to figure out where the donations were coming from throughout the state based on a metro area.

45. 0:15:52

    Uh, and so we were able to find that a lot of the donations, roughly forty-five percent or so, were coming from Metro Atlanta. So we deemed that those were really just a substitution effect, right? These were folks that pri-prior, before the credit, gave to Metro Atlanta hospitals, and now some of their giving was directed towards these rural hospitals. But we did find that roughly fourteen percent of all giving was located in rural counties, rural areas not in an, in an MSA.

46. 0:16:23

    Uh, and so we deemed that that was, uh, new s-- new donations, right? That these people, uh, were motivated by the credit, had not pr-priorly gave to their rural hospitals. And so fourteen percent was new donations from rural areas. There's also a group, roughly forty-two percent or so, uh, in the smaller MSAs around the states, the Columbuses, the, um, Albanys and, and, and, uh, Macon and places like that, uh, that, uh, that, uh, have, um, uh, you know, abut rural counties.

47. 0:16:56

    There, you know, there's perimeter and then there's rural counties. And so we estimated again that roughly fourteen percent of those donations that were given to rural counties could be considered new donations. So the but-for, for the rural counties, uh, for these hospitals is tw-twenty-eight percent, right? So twenty-eight percent of that seventy-five million cap is considered new giving.

48. 0:17:18

    Qualified law enforcement donation credit, uh, this purpose is to strengthen local public safety efforts. Uh, here again, we did find, uh, a small but-for, um, and it-- with the idea we looked at data prior to the program and data during the program, and we did see an uptick in donations. Um, one of the interesting things about this credit is it's primarily driven by, um, donations to Metro Atlanta foundations, and there's caps on the amount that you can give to each foundation.

49. 0:17:49

    Uh, and so i-in the report, we discuss ways perhaps that you could spread that out and maybe increase donations by changing that a little bit. But we did find, uh, uh, that donations increased for this, uh, program. Uh, qualified foster childcare donation, uh, again, this is to support, uh, aging foster children and justice-involved youth. So there is a substantial amount of, uh, uh, organizations in this space, um, and they have existed for a while. So we looked at the programs prior to the credit, uh ...

50. 0:18:22

    that were not qualified, and then after the credit with programs that were qualified, and we could not discern a, a, a difference in giving. So i- for this one, there, there is a, a zero but for, right? Essentially, um, that there was no additional giving. It was just a substitution effect from prior unqualified organizations to now qualified organizations. But in the foster care space, giving did not increase. Uh, the PEACH Education Tax Credit, uh, to support innovation in K-12 public education.

51. 0:18:57

    Uh, here again, we did find a small but for, uh, increase, uh, in, in this spending. Um, th- th- this is a, a tough space, as, as you all know. Uh, if, if you have kids, uh, there are a ton of options to give, uh, and get donations. Uh, or excuse me, uh, get a deduction for your, uh, donation to your school that your kid goes to. Uh, a- and so, uh, th- this is-- You know, we did find a small, uh, increase, but again, with the idea that m- most taxpayers with kids are likely to support their, their, their own.

52. 0:19:31

    Uh, and, and this is d- not in a way-- Th- this, this is a broad credit which people don't exactly know where, where it's going.

53. 0:19:42

    Okay. Uh, so here's just some comparisons with other states. Um, many of these programs are similar to, to programs in other states. Um, the exception being q- uh, the Qualified Foster Care program and the PEACH Education Tax Credit, uh, as well as law enforcement. Tho- those three are, are, are different, but other states do have a, a similar rural hospitals, qualified education expense, uh, and the employer-sponsored childcare tax credit.

54. 0:20:14

    Um, in terms of meeting the, uh, incentives, I kind of talked about this a little bit already. Um, and, uh, so again, there is a, a, a difference between the but-for and the meeting of the, uh, of the purpose. For instance, you know, again, rural hospitals, the, the, the but-for was twenty-eight percent, but again, it did d- it did indefinitely increase by considerably more than that, the amount going to rural hospitals.

55. 0:20:47

    So the goal of funding rural hospitals was met, uh, but, but again, uh, that was most, you know, seventy percent or so due to shifts in giving. Um, but for-- Again, and in the, the-- to the extent that rural hospitals and the communities around them were beneficiaries of that giving, you know, that, that's also, you know, part of the, uh, the goal of, of the program, and so that was also met. Um, and again, these others, uh, did fairly well, perhaps with the exception of the Qualified Foster Chi- Foster Child Donation Credit, but it's a relatively new credit and, and, and we do expect it to grow and, and, and participation to increase.

56. 0:21:33

    So here are the incentive results. Uh, and again, when you see a zero and a cost per job, uh, not applicable, that is because of that zero but for assumption, or not assumption, estimate. Um, when, when there is no change in behavior, if, if the credit were not to exist and the activity would still exist, right, we don't relate any economic activity to that. So in the-- For instance, for rural hospital tax credit, um, for the revenue foregone, inc- and this includes the but for share, right?

57. 0:22:06

    There's two hundred and thirty-two jobs created at a cost per job, uh, of roughly three hundred thousand. Um, and again, you know, the purpose here is, is to provide additional funds to rural hospitals to, to the extent that that was successful, right? But the but for says, "Was this new?" And that's what that's measuring, the new part. Uh, same thing with qualified law enforcement. Uh, you've got an additional hundred and twenty-seven jobs. Uh, and then for the PEACH Education Credit, about thirty jobs.

58. 0:22:38

    And again, that's a pretty-- that's a small credit, but it, but it is growing. It's about five million.

59. 0:22:46

    Um, here is the value added. This is-- could be considered, you know, the, the equivalent of, of, uh, uh, the gross state product, what, what these programs add to the state in terms of economic activity broadly. Um, and again, this is just analyzing the but for portion. So with the part, the, the ones that have, again, are zero because they are not deemed to change behavior.

60. 0:23:20

    Uh, uh, this is looking at new state revenue. Um, again, this is the but for share, so these are relatively small numbers. Um, but again, most of these were not deemed to be economic development incentives, rather f- to foster changes or increased giving, um, to certain, uh, you know, public, uh, charitable groups, uh, that, that provide, uh, services to p- to people.

61. 0:23:55

    Some other points, uh, and again, I kind of touched on these a little bit earlier. Uh, for the employer-sponsored childcare tax credit, um, a- a- again, it's a complex program. It's hard to, uh, effectively tax plan, uh, because you have to spend the money up front and then figure out how much of it qualifies for the credit. Um, and that will vary based on the income of your employees and, and, and other things. Um, and there are some notes in the, in the report that suggest how maybe that could be changed a little bit to make it a little bit more useful.

62. 0:24:31

    Um, for the other qualified donation credits, um, one of the things that was of interest, um, th- that we were told early on was, uh, particularly for the qualified, uh, education expense tax credit, um, there is a gap between the credit cap and the amount of actual donations. Historically, the, uh, the, there would be, the cap would be reached, uh, very quickly in a matter of days, um, at, when the program opened, uh, but, but not all of those donations were realized.

63. 0:25:08

    Uh, and so we had, uh, conversations with the Department of Revenue, um, and they're aware of that, and they have put a program in place starting in tax year '26 that will allow to, uh, the Department of Revenue to assess the actual donations right around September 1st, I believe. I have this in my notes here. Um, September 15th, um, they'll, they'll be, uh, o- offering, uh, issuing a report saying how many donations have actually been met or given.

64. 0:25:42

    Um, and then the difference between those donations given and those donations re- you know, that, that have not been made, they'll, uh, allow new donations to be made to, to reach that cap. Um, so they'll, they'll essentially take out the ones that people have... Th- there'll be a deadline for you to make your donation if you've applied for it, and if you haven't, then they'll reset that and allow new donations to, to, to be given, um, so that the cap can be re- can be reached.

65. 0:26:14

    Uh, th- this is modeled somewhat after, uh, the success of, of the rural hospitals. Uh, the, the, the difference in the programs has to do with, uh, how many different entities are actually collecting, um, donations and processing them. Uh, in the qualified education tax credit, different schools come together or sometimes just one school, and they'll have a scholarship organization, and they'll collect these, uh, donations. Uh, but they don't coordinate amongst themselves, so everybody's interested in, in maximizing their own donations, um, but they don't have a way to say, "Oh, well, it turns out only, you know, I c- I collected 100, but only 70 of them gave." Um, but in the case of rural hospitals, it's all, uh, administered by Georgia Heart, and so they are able to monitor very closely who has actually given, and they shepherd the applications through from the acceptance process to the actual donation process, and then they know who has either not going to donate as much as they thought or may not donate at all, and then they're able to solicit new donations, uh, to reach their cap.

66. 0:27:20

    So this DOR process tries to mimic that, and, and DOR is gonna act as the central organizing agent. Um, one other thing that was of interest, um, was trying to, and we, we b- uh, brought this up in the reports, trying to make some of the provisions, uh, in the reports in ver- in terms of carry forwards, uh, in terms of administration, uh, more y- or uniform across these, these various credits. Again, the five credits that are all, um, income tax based and then the cap credits are all fairly similar.

67. 0:27:51

    Um, but, but the way they're administered and the, their individual provisions are slightly different, so it would, it would, uh, help taxpayers and help administration if they were more similar.

68. 0:28:04

    All right. Um, that is our presentation. Uh, I think we were gonna do questions immediately.

69. 0:28:10

    At, at, at, at, at the end, Dr. Bluestone. I, uh, thank you very much. I appreciate that. Questions at the end. We were gonna ch- bring Matt up at the end and then, uh, get assistance from y'all, I think, at the end with- Sure ... uh, with questions- Okay ... if that's okay. But, uh- That's fine with me. Yeah, great job. Thank you so very much for being here today.

70. 0:28:28

    Can you just tell us who we have next? We've got plenty of time.

71. 0:28:34

    Hello, I am Ben McKay. I represent the, uh, Center for Business Analytics and Economic Research at Georgia Southern. Uh, go Eagles.

72. 0:28:42

    Go Eagles.

73. 0:28:42

    Like to, uh-

74. 0:28:43

    All right

75. 0:28:43

    ... like to go ahead and acknowledge a couple members of our team here that, that were able to join us today, uh, Dustin Denham and Laney Harris. And, uh, Kerry, uh, Christian unfortunately had to stay in Statesboro for other obligations, so he, he was unable to join us today. But we're pleased to be here to talk about our two, our two projects. The fir- both of which are ta- are tax, um, cre- are, uh, sales tax credits. Uh, one focuses on the pr- um, professional and laundry services, and the other one is the trade-in vehicle tax exemption.

76. 0:29:21

    Uh, both of these really are, in our view, were not economic developments per se. They were more focused on cr- on encouraging economic activity, um, and they perform that purpose fairly well given what they were desi- what, how they were designed to, to work. When we s- looked at the personal and laundry services, 'cause I know everybody's carrying this information around with them in their, uh, in their head right now, 'cause everybody here knows the NAICS code so well. Um, it's okay to laugh. It's, nobody does.

77. 0:29:53

    Um- So basically what we ha- what we have here is we have the pers- we have a personal care industry, so those would be barber shops, those would be, uh, beauty salons, nail salons, those sort, those sorts of activities. Uh, death care, death care services, so both morticians and funeral homes in addition to cemeteries. And then we have dry cleaning and, uh, laundry services, so that's both coin-operated machines, um, that you'd find at a laundry mat, and those are also dry cleaning, dry cleaning services.

78. 0:30:25

    And then we also included within that personal care, uh, services, these are pets, these are pet grooming, photo, uh, photo finishing and parking lots. So generally, we use price elasticity of demand to figure out both of these and to be able to isolate what it, what the economic activity was within, within both of those. Um, the ide- so, so as we kind of looked acro- we looked across at both of those, these are both fairly what would be termed inelastic industries, so they don't move very much based on, based on price because you're still gonna need a car to get to, to get to work or wherever it is you're going.

79. 0:31:05

    You're still gonna need to have a haircut every once in a while or gr- get the dog's nails cut. Those sorts of things are going to always be, um, particular, particular pieces of, of needs for individuals, so there's not a whole lot of substitution allowed, um, within those. So as we looked, uh, more closely at the, uh, personal and laundry services, really about eighty percent of the economic activity within this focuses on the personal care and laundry ser- the laundry services part and then the, uh, and then the other services that made up about eighty percent of the, of the industry which fit with what we were expecting to, to find within that.

80. 0:31:47

    For the trade, for the, for the trade-ins, um, this is the part where we kind of had a pr- had a nifty little graphic. But generally speaking, the, uh, pri- the, uh, you have your vehicle price, your, uh, when you, when you walk into the, into the dealership, we solely focused on dealerships and those sorts, and those sorts of activities. You select the car, you do your negotiation, and then you take the pri- you, you do the trade-in, the trade-in comes off the price of the vehicle, and then it's the net price afterwards that is taxed, taxed on the, uh, on the new vehicle.

81. 0:32:20

    And what this does is it allows you to not to, uh, consumers to not pay the tax on the trade-in vehicle, and that stimulates a little bit of, uh, movement within the, uh, within the auto market as they, as they go through that. Um, if we look more specifically at what other states are doing, um, we had an opport-- We, we looked at this. It's really a mixed bag across the, uh, the US for personal and laundry services. Um, pr- w- in the contiguous states, both Georgia and Alabama don't tax services in this industry at all.

82. 0:32:57

    Um, and then the ones that did really focused in on the ge- on the, uh, on the la- on the laundry and coin-operated ma- and the coin-operated machines, so they kinda did a split with that. So coin-operated tended to be exempted from all ta- exempted from all taxation, where if you had a person involved in, in the transaction, the tendency was if it was going to be taxed, that's where it was taxed at. So if you brought your dry cleaning in, that would be taxed.

83. 0:33:28

    You went to the laundromat and put a coin in the machine, nothing. And coin, again, is a relative term these days, so of course you could flap your card across it, and then that would work the same, the same way. Um, and then the other, and then the other one were the personal laundry service, the... Sorry. The, uh, other, uh, other personal services. So we saw dog grooming as one of those areas where we had a number of a d- of, uh, of ta- of taxing of, of that, and that was kind of within the industry.

84. 0:34:00

    Um, so then the other one that we, when we looked at the vehicle, say, uh, trade-in, trade-in tax exemption, there-- Basically, if you have a con- if you have a consumption tax in the United States, there are, you're n- most likely exempting the, uh, this from all, uh, from taxit- from taxation in that, in that way. So the three s-- So only three states, uh, within that group actually had a s-sales tax applied to the trade-in that you made when you did your, when you did your purchase.

85. 0:34:34

    Uh, just for the record, those are California, Hawaii, and Virginia. So kind of an odd mix across, but with some very unique characteristics within each one of those. Everybody else exempted the trade-in from the, from the tax, uh, rate. And then the, uh, the contiguous states, there were still, there was, they were, they were exempted to a cert- all exempted to a certain, uh, to a cert- to a certain level across the, uh, across the industry.

86. 0:35:06

    So as we kinda moved through the analysis, the other way that this really met those ki- the kind of standards that we were looking at, looking for was that it both avoided double ta- both avoided double taxation of, uh, on the goods and s- on goods and services. So within the fir- within the personal and laundry services, you had a lot of smaller companies that would ha- that were having trouble, would have trouble dealing with a sales tax.

87. 0:35:36

    And so by exempting that, you're, you're incr- you're increasing the economic potential of those, of those small proprietorships. And in addition to that, you did have an, you did have some small, um, hospital laundry services and some other, and some other specific, uh- Highly specific washing of materials that were, uh, let's call it highly sensitive. So I could s- so those would be, those would have a, those would have a different impact across the, uh, a- across the, the way that these things would, would work within the economy going, going, going up to similar industries.

88. 0:36:13

    The trade-in vehicles really, um, we, as most people in, um, this room I'm sure remember the, the ad valorem personal property tax that was in place prior to this new system. This replaced, this replaced that system. By doing that, it's allowed for a similar revenue collection, and it avoids the idea that we're taxing it once when it leaves the lot, and then we're not gonna tax it again when, until it goes back into the system as a new, as a new vehicle or as a used vehicle to be able to do that because it's new dep- new depending on the dealer, on the dealer type in which we would be looking at.

89. 0:36:50

    So those were kind of the two, those were the two big areas there with that. On the economic side, what we re- what we really did was kinda dug in using the but for like, uh, the r- like, the remainder of our colleagues did, and we really tried to, to have a firm look at that. Um, so what we found within the, within this was about w- a hundred and sixty-six point six million was in foregone r- it was in foregone by the state for the personal and laundry, laundry care services, uh, por- portion of it, and that ended up with about twenty-three mill- twenty-three thousand in ret- in return on that investment.

90. 0:37:34

    Uh, this one had a little bit higher just because of the nature of the industry and the amount of small firms within it. The vehicle t- the vehicle tax, we really tried to focus in. It's a mul- it's obviously a multi-billion dollar industry in terms of car sales and how those sales, sales work. We're talking about over the life of the credit that we looked at over the five years, like one point six million cars w- took advantage of that, uh, ta- of that, of that ta- or transactions took advantage of that, um, ta- tax exemption.

91. 0:38:10

    Um, but w- but really, there's a very small percentage of that that's actually attributed to the, to the impact. The one area that we tried to account for, but it was a little challenging, was the idea that it, that if you in, if you aren't doing the incentive, how much of the tax pur- of the purchasing would, would result in people switching to a cheaper car or a cheaper price? Because, um, we, we can guarantee that not everyone is going to go, "Oh yeah, I can't wait to sell my car in the pr- in the, in, in the, in the open market instead of doing the convenient trade-in at the dealership." So we did try and account for that somewhat, which is why the cost per job on this was so much higher because there's just not a whole lot of elasticity there to be able to move it along.

92. 0:39:02

    So that's why it's three hundred and forty thousand per job, mostly because we still see activity taking place regard- regardless. Um, and then we kinda moved in and took a, took another look at the g- at the, uh, at the value a- at the value-added side of thing and, side of things. And this cr- created a pretty... So for one of them, for the personal laundry services, a strong, um, kind of return on investment to the state economy of, uh, one, about a dollar fifty per, or per investment, so per dollar s- per m- per dollar spent.

93. 0:39:40

    So it really ends up having a fairly strong, uh, movement through the economy in that, in, in terms of re- in terms of return, where the trade-in tax exemption, again, because we had took a nar- a very narrow, uh, view of the automotive industry, uh, ended up at about, uh, fifty cents per, per dollar spent. So it's, there, there's a little bit of a di- there's a little bit of a difference there, but there's value outside of these from a non-econom- from a non-economic de- development standpoint.

94. 0:40:11

    So at any rate, we also went ahead and looked at th- what that would be for the, for the state, um, in terms of re- in terms of return. So we're talking about six cents on the do- on the, on the dollar for revenue generated from the personal and laundry services. And then the, uh, excuse me, and then the trade-in tax exemption was also, uh, about two, about two cen- uh, about, about two cents within, within that, uh, within that market.

95. 0:40:44

    Um, all right. So then our other points sit, uh, with it when we lo- when we looked at these, uh, the personal and laundry services definitely had, um, a lot of micro, w- micro-businesses, so firms with less than ten people, lots of indep- lots of independent contractor type, type arrangements. So there's a lot of opportu- there's a lot of opportunity here. There's a tax fair- there's a tax fairness issue in terms of trying to tax this partic- these particular services because they are used by a lot of lower in- lower-income individuals and across the, and across the group.

96. 0:41:22

    And then the other one are the other, uh, other states that are, are just not taxing this industry as widely as, as others. So it's a very hodgepodge sort of environment when you look at, when you look across the, uh, ac- across the country in terms of how these are, how these are moving. And then the same, i- and so the trade-in tax exemption was probab- was also avoiding that double taxation that we, that we've talked about. Um, non-mone- the, a lot of the non-monetary benefits were a driver of the, of the activity, trying to make sure that car dea- the cars are moving, and then the keeping the, uh, keeping in line with other states because, again, very few states tax this, uh, this, this part of the, of the car purchasing, uh, transaction.

97. 0:42:11

    So with that, I will turn it over to our friends at UGA and let them, uh, give you their rundown of their analyses. Thank you.

98. 0:42:20

    Thank you, Dr. McKay.

99. 0:42:27

    UGA, go Dawgs.

100. 0:42:29

     Go Dawgs.

101. 0:42:29

     All right, let's go.

102. 0:42:30

     Uh, good afternoon. Thank you, Mr. Chairman, for having me here today for the opportunity to talk about the work we've done for the Department of Audits and Accounts. My name is Greg Wilson. I serve as, as an associate director at the Institute of Government, uh, and I lead our economic analysis team, which conducted four studies for DOAA, uh, over the past six months or so. Uh, here with me today is one of my colleagues, Jesse Justice, who helped with all the analyses. Uh, Dr. Tommy Shepherd, uh, who leads our economic analysis team, uh, he was unable to be with us today. Um, so, uh, broadly, you can think of our four provisions that we looked at in two buckets.

103. 0:43:06

     Uh, the first bucket is thinking about services that are currently exempt, uh, from sales tax right now. Uh, think of this just what Ben from Georgia Southern talked about in terms of the laundry exemption. Uh, these are similar to the ones we're talking about here today. And then the second bucket we're talking about is think of these more in the, uh, th- uh, the thought of economic development incentives, uh, that are encouraged to stimulate investment in the state of Georgia. Um, so the first two covering services that aren't currently m- taxed right now. Uh, the first one would be the administrative and support services.

104. 0:43:39

     Um, and I like to think of these as services that help to drive the larger economy. Uh, these are things like office administrative support, facility support services, so cleaning of offices, temporary staffing services, security services, travel arrangement services, the services that really help to drive, you know, large facets of the economy. Um, and these, of course, are currently not subject to sales tax. Uh, the second one we looked at was waste remediation, uh, waste management and remediation services. And that one is really just what it sounds like.

105. 0:44:10

     Um, it's the, it's the collection, it's the management, it's the treatment and disposal of, of waste, you know, household garbage, commercial garbage. Uh, and these are also not subject to tax as well today. Uh, third one I want to talk about is the Manufacturers Incentive Tax Credit, or MITC, if I call it that today. Uh, this was first passed into law in 1994. Um, it has been amended a number of times over the years. Um, in its current firm-- form right now, uh, manufacturers that have been operating in the state for at least three years and making a minimum investment purchase of a hundred thousand dollars, uh, can qualify if they're making purchases of approved expenses.

106. 0:44:50

     Uh, things like land purchase, uh, construction of a new building, uh, renovations of buildings, purchase of existing buildings, used equipment, um, as well. Um, and they're, and they're allowed a income tax credit of one percent to eight percent, depending on a variety of factors. Um, one item I want to mention right up front here today is on the MITC. Um, you know, we face data limitations on how the MITC was utilized in Georgia, uh, and that did limit the depth of our analysis.

107. 0:45:20

     You know, if additional data were made available, uh, we could certainly enhance the study further. Uh, finally, the data center sales tax exemption. Uh, this was passed into law in 2018 here, and it exempts a portion of the construction services, materials, and also the purchases of server and other related equipment, uh, for data centers from our state and local tax in Georgia. Um, there are minimum investment thresholds and job thresholds that have to be met. There's a sliding scale between more urban and rural parts of our state, uh, for this as well.

108. 0:45:52

     Um, and I did want to flag for the committee also, um, that we did a similar study about three and a half years ago for the Department of Audits and Accounts, uh, and I'll talk about that briefly when I get to the end of my presentation. Um, one other thing I should note is that since we did that initial study, uh, data centers have really grown significantly in the state of Georgia, but also across the United States. So if we look at a comparison to other states' incentives, uh, for our first two on the services, um, you know, similar to what Ben had mentioned, uh, most states don't tax services.

109. 0:46:26

     Um, so, you know, we're similar in that regard, where, you know, we're not taxing administrative services or waste management services similar to other states. On the manufacturing investment tax credits, uh, what we found there is that there are similar tax credits offered by other states. Um, but really the difference is, is Georgia's is more structured with that one percent to eight percent and various ways to earn, uh, you know, larger income tax credits. Um, and then also Georgia compared to other states has a lower floor. So the investment threshold for MITC in Georgia is a hundred thousand dollars.

110. 0:47:00

     Um, a- other states, of course, it's, it may be much larger than that. Um, you know, on the data center exemption, um, you know, many states now have a data center exemption. Uh, of course, the details do differ by state, of course, on, on that. So, uh, let's talk about, uh, purpose. Um, you know, as Matt mentioned, some of these, uh, the purpose may not be fully clear, um, in the law. You know, when we look at whether they meet their purpose, generally, I think the answer is yes. Um, but maybe it's likely on a spectrum. You know, the two service exemptions were found to marginally stimulate, uh, economic activity.

111. 0:47:36

     Um, and we can talk more about that. Uh, the manufacturer's investment tax credits, uh, our analysis found that increased equip- uh, spending on equipment and construction of about one point three four percent. And the high-tech data center exemption study found that thirty percent of data centers in Georgia, the construction of them, could be attributed to, uh, this tax exemption. Um, so what that means is that seventy percent of data centers constructed in the state of Georgia, uh, we, you know, would've been built without this exemption. That was that but for that Matt mentioned at the start and also when he was mentioning that one-page summary.

112. 0:48:10

     Um, so, uh, thirty percent can be attributed to the exemption, seventy percent would've been built, uh, likely w-without the exemption. So let's, uh, let's dive into some information around what we found on the incentives, a similar set of tables you've seen here already this afternoon. Um, for the administrative and support services, uh, the estimated net foregone revenue for the state of Georgia is around one point one four billion dollars. Um, you know, that industry or that, that exemption supporting, uh, twenty-two thousand six hundred and eighty-seven jobs at a cost per job of fifty thousand one hundred and ninety-six.

113. 0:48:46

     Uh, so it's a, a larger industry compared to the second one, which is waste management exemption and remediation services. Uh, you know, the state has a net foregone revenue of around seventy-eight point two million, um, and, uh, the exemption supports around four hundred and five jobs, uh, at a cost of about a hundred and ninety-three thousand per job created or supported. Uh, for the MITC, uh, the net foregone revenue for the state, uh, totals out to about a hundred and forty-four million, uh, supports a hundred and seventy-six jobs at a cost per job of eight hundred and sixteen thousand.

114. 0:49:19

     Uh, lastly, on the data centers, um, we found the net foregone revenue for the state of Georgia to be four hundred and thirty-two, uh, million, uh, supporting ten thousand jobs at a cost per job of, uh, forty-two six thirty-eight. And on all these, uh, the but for assumption has been applied, uh, to these.

115. 0:49:42

     So we know that this is only one facet of this. We can also look at value add, so what's being added to the state's-- uh, you know, think of state gross domestic product. Um, and you know, um, what we can think here is that the administrative s- uh, uh, support services tax exemption, uh, had a value add of around one point six four billion, so that comes out to about a dollar and forty-four cents of economic growth for, uh, for revenue foregone. Uh, waste management and remediation services, uh, state, uh, you know, the value add was forty-eight point one million, um, so that came out to about sixty cents of economic growth per dollar of state foregone revenue.

116. 0:50:23

     Uh, for MITC, a value add of thirteen point five million, it's about nine cents of economic growth per dollar of foregone revenue invested. Um, and then for a high-tech data center exemption, um, you know, it generated one point two five billion in, uh, value add for the state. Um, so when you take that and compare that to the foregone revenue, it's about almost three dollars of, of economic growth per dollar of revenue foregone.

117. 0:50:53

     Uh, when we look at state revenue, um, and new state revenue generated, uh, for administrative support services generated fifty-two point two million dollars in new state revenue. Uh, so state revenue around four cents per dollar of foregone revenue. For waste management and remediation services generated about a million and a half of new revenue, uh, you know, around two cents. Uh, for MITC, about a half a million dollars in new state revenue, uh, so about, you know, less than one cent of state revenue per dollar invested. And then for the high-tech data center equipment exemption, uh, we found that generated about forty-one and a half million dollars in new state revenue or around nine cents of state revenue, uh, for dollars invested.

118. 0:51:34

     So, uh, I wanna, wanna round out my presentation today, uh, by offering a couple other considerations that you'll find detailed in the reports. Uh, first thing I would say on the sales tax exemptions, the two that we studied here, uh, these are common exemptions offered by most states. Um, and as I mentioned, they really just ki- uh, marginally stimulate economic activity in the state of Georgia. For MITC, um, I think it's again important to note the data limitations that really impacted the depth of our analysis on this work. Uh, if, you know, further data were available, we could expand or enhance the study, um, on that.

119. 0:52:09

     Um, other states have similar tax credits to Georgia's MITC. Um, you know, uh, Georgia's, uh, um, you know, being how it, um... Lost my train of thought. Excuse me, y'all. Uh, you know, Georgia's is more structured with a one to five percent, uh, based on tier status, and then the additional three percent is based on some specialized areas, uh, identified in code, like environmentally beneficial projects, defense spending, uh, and then there's also some provisions related to rural. Um, you know, one thing that's really interesting when you look at Georgia's MITC versus other states is the much lower investment threshold.

120. 0:52:46

     Um, and you know, we posit thinking about that, that maybe that offers a barrier, uh, a lower barrier of entry to small and mid-sized manufacturers, where in other states the investment floor might be in the millions of dollars versus Georgia being at a hundred thousand dollars. Um, when you think about the MITC, you know, one other thing I think it's important to mention, um, is that some of the investment categories in the MITC, um, you know, would generate little to no economic impact on the state of Georgia. So for instance, the purchase of land itself doesn't actually generate economic impact.

121. 0:53:18

     Same with the purchase of existing buildings, uh, really just swapping the title, um, you know, to somebody else. Uh, same thing with used equipment. And then even thinking about the purchase of new, uh, equipment to equip manufacturing, uh, you know, our research found that much of that equipment's produced outside of Georgia and even outside the United States, so that purchase necessarily isn't accruing additional economic benefits, uh, to the state of Georgia. Let's talk about data centers. Um, as I mentioned, we did a similar study back in twenty twenty-two for the Department of Audits and Accounts we brought before this committee.

122. 0:53:54

     Um, the prior study attributed ninety percent of data center activity, uh, data center construction to the exemption. As I mentioned earlier, in this study, uh, we attribute thirty percent of data center construction to this exemption. Uh, there's probably the question of, you know, why that changed. Um, and what, what we found is it's really largely due to the growth of data centers in Georgia and nationally. Um, if you might recall back in twenty twenty-two, we did the study, uh, the Department of Revenue had so few applications for the data center incentive, they weren't actually able to release any information on data centers in Georgia.

123. 0:54:28

     So that gives you a sense of, of the growth in data centers, uh, really in the past three and a half years. Um, you know- You know, the economic impact for Georgia from data centers is largely generated by the construction of data centers, so, uh, the materials, the labor, uh, that- that's attributed to that. You know, nearly all of the servers and equipment is, is, uh, manufactured outside the State of Georgia, uh, much of it actually manufactured outside of the United States as well. So that same caveat that I made on MITC also applies to those equipment and servers.

124. 0:55:02

     Um, one thing I, I will note that you can find in the study as well is our team was asked to consider, uh, a little bit on local property taxes, kind of outside the traditional scope of the Senate Bill 6 studies. Um, but there was m- so some interest in understanding how do data centers interact with local property taxes. Um, we weren't able to do a full workup in the study, but you'll find, uh, towards the back of the study, I believe it's around page 45 or 46, uh, we did look at several representative data centers in Metro Atlanta, uh, trying to understand, you know, kind of what was the interaction between local property taxes, property tax abatement, and revenue generated.

125. 0:55:39

     Um, so we looked at several representative data centers, and we found that even with the typical abatement package being offered to data centers in Metro Atlanta, uh, they're still generating significant, uh, property taxes for the local governing authorities, even with an abatement on them. Um, so with that, I will turn it back over to Matt Taylor, um, of what's next. Thank y'all.

126. 0:56:04

     Thank you.

127. 0:56:09

     Pen?

128. 0:56:09

     I w- what? I-

129. 0:56:11

     Yes

130. 0:56:11

     ... I missed your name. I'm so sorry. What was it?

131. 0:56:14

     I'm Greg Wilson from the University of Georgia.

132. 0:56:15

     Dr. Wilson?

133. 0:56:16

     Yes.

134. 0:56:16

     Okay. Well, very good to have you, Dr. Wilson. Um, and Matt, I, I, you know, I'll let you, you come up with any wrap comments. I mean, I, what I do, would like to do is, uh, I think this is the most, uh, well-attended, uh, Ways and Means Committee meeting that we've ever had- ... since I've become chairman. Uh, quite, quite amazing here. Well, we, we, we, uh, do a lot of business today. The, um, I, I, I think I'd like to get a, you know, kind of some feedback from the committee. I can guess that, uh, probably those last couple will be on the list, but maybe for us to reconvene and take a little deeper dive and maybe get some more questions answered, I'm, I'm guessing-

135. 0:56:55

     Sure

136. 0:56:55

     ... that's where most of the questions will come. Um, if there's any outside of those last couple or if there's anything any- anyone in particular has for Matt or the team, uh, I would also ask if, if possible, that maybe the analysts could hang around after the meeting if somebody has some, some more probing questions that, that could get answered as well.

137. 0:57:17

     I, I, I, I think that they can. We, we, we talked about a longer timeframe.

138. 0:57:21

     That, that, that would-

139. 0:57:21

     So we'll be around

140. 0:57:22

     ... that would be great, Matt. Um, and I have no lights lit up, so it must be that we were...

141. 0:57:29

     Okay.

142. 0:57:30

     Okay, here we go. All right. We've got a couple of questions. All right. And listen, if, again, if your hand's up, is, if... Are these data center questions? 'Cause we're gonna come back together on... We're gonna come back together and, and, and dive deeper. We had some numbers change, and we had a number of people that wanted to testify there, so that is something I think'll be at the top of the list on re- readdressing. But if you have a non-data center question, bump you. Uh, who's 22?

143. 0:57:55

     Me.

144. 0:57:56

     Okay. All right. Chairman Williams.

145. 0:57:59

     Thank, thank you, Chairman Blackmon. Um, um, my question is back to the University of Georgia presenter, uh, about the manufacturing investment tax credit. And just out of curiosity, when you, um, you're reviewing the e- economic activity on this, did you happen to break out by tier what the, uh, the investments in the various tier counties? Um, because the incen- the, uh... What we were trying to do when this last, this-

146. 0:58:28

     Mm-hmm

147. 0:58:28

     ... code was last touched was trying to incent more investment in rural counties in Georgia.

148. 0:58:35

     Sure.

149. 0:58:35

     Uh, and it was broken down by tiers.

150. 0:58:37

     Mm-hmm.

151. 0:58:37

     And you referenced that, but I'm just wondering whether or not you could share with us or-

152. 0:58:41

     Um, we have-

153. 0:58:42

     ... point me in the look at where, if, if, if it, if our efforts were successful.

154. 0:58:46

     Uh, so I don't believe that we published that in the report, uh, but we do have the, the credit utilization by county, so we're able to do, you know, some analysis on the tier. I'll be happy to work with the chairman to see if we can't, uh, assemble that data or maybe further answer that question offline.

155. 0:59:02

     Thank you. I'd appreciate that.

156. 0:59:06

     Mm-hmm.

157. 0:59:06

     Vice Chair Lady, uh, Stinson.

158. 0:59:10

     Uh, yes, sir. Thank you, Mr. Chairman. Um, Dr. McKay, I believe it was, that did the report from Georgia Southern, um, and he referenced death care services. Um, so is death care services... Can you share just a little more, expound more on what, what was your point about death care services and the, and the taxes?

159. 0:59:30

     Um, that we're not, that we are not taxing, um, and very, and no other, and very few other states are as well, uh, taxing funeral homes and death care services. Uh, we used the NAICS code to define the, uh, how this tax credit works since it was not outlined in law for, uh, for that, and so that's why we included death, uh, death care services, so the, uh, funeral homes and, uh, cemeteries.

160. 0:59:56

     Are not to pay?

161. 0:59:58

     They're not, they're not... We do not charge sales tax on those, on those, uh, industries.

162. 1:00:06

     Get a refill.

163. 1:00:08

     'Cause I, I pay sales tax. I'm a little confused. Well, I, I pay sales tax-

164. 1:00:11

     You-

165. 1:00:11

     ... on the merchandise.

166. 1:00:12

     Yes.

167. 1:00:13

     Correct. That's the, uh, that was, that-

168. 1:00:15

     Not your services

169. 1:00:15

     ... I did not say, I did not make that point clearly.

170. 1:00:18

     Oh, yeah.

171. 1:00:18

     But yes, there, on tangible personal property, there is a potential to charge sales tax on those. But in terms of the actual service itself or any other service that's provided within that, those services are, the, the service side was, uh, was what we focused on.

172. 1:00:35

     Okay. I got it. Thank you. 'Cause I pay, you know- Plenty of sales tax and merchandise tax

173. 1:00:42

     The, uh, the, one of the things I, I think maybe to clarify is that, uh, the House has taken a position that we've looked at kind of a, a top-down and scroll through most of these credits and exemptions based on the size and looking at the, the bigger ones and rotate down through as we get through the list. And, um, I think, uh, one of the things that we noticed from the Senate request is they hit some of these services that are exempt currently. And so, a little bit confusing there, so I can understand that. Uh, um, Chair- Chairman Williamson, are you...

174. 1:01:15

     I, I do have another question, and I can't remember who made the presentation about the Rural Hospital Tax Credit. I- if I could just ask you to step back and...

175. 1:01:27

     I'm trying to, trying to understand this. Um, you were referencing that donations were coming from Metro Atlanta area, obviously the highest concentration of wealth in the state.

176. 1:01:36

     Yes.

177. 1:01:36

     Were previously been, y- y- you, you discounted the fact that that economic, that those donations s- they started going to rural Georgia when this, um, um, tax credit was implemented. But now I hear you say the assumption was being, your assumption was those donations were occurring every year prior to the Rural Hospital Tax Credit.

178. 1:01:59

     Uh, yes. Uh, th- there's, uh, substantial data on donations to hospitals and healthcare, and it's, um, a really large, uh, area of donations, uh, i- in, in the hundreds of millions. Um, and so it, it's tough to see in that really large space the impact of the 75 million. Um, but, but they are, have occurred in the past and, and are continuing currently.

179. 1:02:28

     Yes. Uh, help me understand that, because prior to this tax credit, those were true donations, and the only thing the donor was getting it from it, assuming they were, um, um, individual or a company, was the, um, w- was they were able to expense that, um, or deduct it. So you effectively just got your, uh, taxes back on it. So, but in our Rural Hospital Tax Credit, it's really a redirect of your ta- You're really not giving anything. You're just saying rather than money going to the Department of Revenue, it's going to go to the rural hospitals.

180. 1:03:01

     Correct. Correct. Yes.

181. 1:03:02

     So there's really no donation, it's redirected taxes. So it was just interesting to hear you say that, um, it wasn't the same degree. There were actual donations being made in Atlanta prior to this program coming in place. I would assume that would've stepped up even more activity coming out of the Atlanta area, um, if I'm, you know, because more people would, uh, uh, let's say less wealthy people would say, "Well, I'm happy to redirect my taxes. Uh, but I don't have the $100,000 to give," or the, whatever the number is, "$5,000 to give to..."

182. 1:03:39

     O- o- one, one of the, um, parts of the analysis that we looked at closely was the income distribution of the donors. Um, and in rural hospitals, as in a lot of these credits, uh, the, the distribution of income skews, you know, to, to the higher income individuals. Um, so it is possible that people in the, the metro area said, "Oh, sure, you know, I've got a little bit of, of, of money I'd like to give," a- a- and they did that. Um, but in terms of the magnitude, we're, we're thinking it was mostly, um, uh, again, for the, for the high donors, right?

183. 1:04:14

     Right.

184. 1:04:14

     We got people planning their taxes and planning their donations and things that they're just kind of moving them from one place to another.

185. 1:04:20

     And these, these were not coming from foundations. These were coming from, uh, either businesses or individuals, correct?

186. 1:04:29

     Yes.

187. 1:04:29

     Now look, you know, you weren't, um, lay- overlaying nonprofits giving to the...

188. 1:04:34

     Right. These are individuals or pass-through entities or corporations, yeah.

189. 1:04:38

     Thank you for clearing that up for me.

190. 1:04:39

     Mm-hmm.

191. 1:04:43

     Representative Holcomb.

192. 1:04:45

     Thank you, Mr. Chairman. Dr. Bluestein, my question's for you, too, on the Rural, um, Hospital Tax Credit. Did you look longitudinally to see how this is helping the hospitals? Because unlike maybe some of the other tax credits, this does have an explicit purpose and goal, which is to reduce the insolvency of our rural hospitals and to balance or to improve their balance sheet. So from 2017 to today, do we still have the same pool that are at risk or any less at risk?

193. 1:05:16

     Like, in, in other words, quan- or qualitatively, how is this doing? I, I understand the ROI aspect of it, but are, are fewer hospitals, to summarize, are fewer hospitals at risk now because of this, or are we about the same place?

194. 1:05:32

     Um, we did not really delve into that level of specificity. We were really more interested in the level of giving. Um, it, it's much more challenging for us to assess the impact of that giving on individual hospitals. Um, there was a lot of comments made that the, the, the, um, program did have beneficial effects to the individual hospitals that received the donations. Um, but again, for our purposes, we're looking at how much, right?

195. 1:06:02

     Um, and, and so, um, and, and again, from where. Um, but, but again, it, it does appear that from the comments that, to, to your point, that, that these are having benefits.

196. 1:06:12

     Okay. Thank you.

197. 1:06:17

     Representative Buckner.

198. 1:06:19

     Uh, don't go far. This is on the Rural Hospital Tax Credit as well. Uh, I'm just a little confused, and it just may be some of the wording, but it talked about it having a negative, um, economic RO- uh, because the state loses revenue. So I understand that they're not paying that revenue in as taxes, that it's going to the hospital instead. But aren't there some cost avoidances that could be factored in to sh- show that while there might not be a real money Um, benefit to the state that we're saving jobs or we're adding jobs or we're taking care of healthcare needs that has some kind of added value?

199. 1:07:03

     So, so that's what we try to get at with the but-for issue, right? Essentially, and again, this doesn't-- this looks at the state as a whole.

200. 1:07:14

     Mm-hmm.

201. 1:07:15

     Um, let me put this down. Um, and so I, I think your point is, is, is well made that for these individual hospitals and for these rural areas, the answer is yes, this is having a great impact. Um, but it's coming from other parts of the state. So on net, that's what we're, that's what we're looking at. Y- we, we can both be right, um, but on net for the whole state, that, that's where that ends up.

202. 1:07:43

     Okay, I gotcha. And there's no way for us to project anything about sustainability using this instead of some other funding source, I don't guess?

203. 1:07:53

     That sustainability in terms of?

204. 1:07:55

     Taking care of the rural hospitals.

205. 1:07:57

     Oh, um...

206. 1:07:59

     You know, extrapolating- ... is this gonna continue or is it gonna stay the same?

207. 1:08:03

     Yeah, yeah, that, that, that would be a, a different analysis.

208. 1:08:07

     Right. Thank you.

209. 1:08:07

     Mm-hmm.

210. 1:08:10

     Matt, did-- I, I believe I heard Dr. Bluestone mention that there would be some ease of administration if, if these may be close-- more closely aligned with one another.

211. 1:08:22

     That, that's correct. We've had conversations, I mean, yeah, Dr. Bluestone and, uh, the Department of Revenue-

212. 1:08:27

     Department

213. 1:08:27

     ... talked about the complexities and the, the confusion to taxpayers-

214. 1:08:31

     Gotcha

215. 1:08:31

     ... uh, associated with these. Um.

216. 1:08:33

     All right. Well, uh, I don't, I don't have any further questions. We will invite you back. Um, and, um, Dr. Wilson, perhaps you as well, but, uh, we'll see what other ones, uh, kind of bubble up to the top and, and try to, try to jump back in. But really grateful for y'all to take the time to be here today. I know most of you drove a little bit of a distance. Uh, not you, Dr. Bluestone. You're pretty close, right?

217. 1:08:59

     It's a long way home.

218. 1:08:59

     And, and thank everybody for sitting through some, uh, some numbers discussions right after lunch. Uh, much appreciated. If, uh, nobody has anything further for the good of the order, we stand adjourned.

219. 1:09:12

     Yes, ma'am. Just what I've been doing. She, she looked at 2017. Um, so she ended up doing