New tax incentives that helped lure NCR's headquarters to Georgia could also help bring more new jobs and companies to the state, economic development officials say.

NCR announced last week that it will relocate its corporate headquarters from Dublin, Ohio, to Gwinnett County, plus bring 2,100 new jobs to Duluth and Columbus. One factor in NCR's decision was new incentives signed into law last month that enhance the state's ability to compete for new business.

The new laws provide "significant changes in incentives that put Georgia on level a playing field with many of its competitor states," says Hans Gant, senior vice president of economic development for the Metro Atlanta Chamber. "When it comes to the statutory incentives, I think we're competitive now."

Gant says changes to the state's "Mega tax credit" program was one key in recruiting NCR. Officials had been talking with NCR for a couple of years about relocating to the metro Atlanta area. The new tax credit "wasn't the thing that won it, but it certainly broke the tie. It provided the icing on the cake for the company to go ahead and make the decision."

Heidi Green, deputy commissioner of global commerce, Georgia Department of Economic Development, agrees, also suggesting that the incentives alone are not what draws companies like NCR, General Mills, Chico's, Cbeyond and Verizon to announce significant new jobs in Georgia over the past few weeks. "The CEO of NCR, Bill Nuti, has says publicly they did not do this deal just because of the tax credits," Green says. "It's our other strengths, such as the global airport and the talent base. At the end, the tax credit helped us close that deal. It's one of the things that put us over the edge in competing for that business."

Both Gant and Green say the new incentives are helping Georgia talk with companies that could come here. Green says there are "several companies we're talking to" about coming to Atlanta. She says incentives are not typically a factor early in the process. When companies look for a new home, they are drawn by such factors as global access, a business friendly environment and a strong work force. "But when you get down to that short list, we feel this [incentive package] gives us an edge. That makes it important in closing that final deal."

Too much?

Gant says the changes are intended not just to lure companies to relocate in Georgia, but to encourage existing companies to stay here and expand. "We think this will be helpful in closing other deals in the pipeline," he added.

Green says she has heard some questions about whether Georgia is going too far to lure new business. "In terms of our incentives, we're in the middle of the road," she says. "We're not the most aggressive. We're not doing some of those things [other states do] that we believe are not fiscally responsible."

She says officials ran careful models and "feel we can still bring positive revenue to the state with these credits." For example, NCR's Mega tax credit is about $56.8 million based on 2,100 jobs. Over a 10-year period, she says, the state expects to recover that amount plus show a net gain of $49 million. And that figure does not include spin-off jobs from the NCR relocation. She says one economist estimates each NCR job will create another job in Georgia's economy, but "we're not including a multiplier effect" in those figures.

This was the right time to update incentives, Gant says. The last time Georgia passed major legislation related to economic development was more than 15 years ago. "Since then we've had some minor tweaks, but the incentive game has gotten very competitive over the past few years. The competition was not sitting still and the playing field had changed significantly."

Two years ago, Green says, state officials reviewed how the area compares to others states. While a KPMG study found Georgia ranks well in the overall cost of doing business, "there were a few places where we had new opportunities we could pursue," she says. The result was House Bills 438 and 439, which Gov. Sonny Perdue signed into law in early May.

Green says HB 439 provided "the first substantial changes in at least 10 years to the BEST Legislation, which drives statutory incentives." She adds, "There are two pieces we're really excited about; the updated R&D (research and development) tax credit and the Quality Jobs Tax Credit."

The previous R&D tax credit was "not very beneficial" to new and emerging companies, Green says, because they needed to show positive taxable income for three years to qualify. She says the new bill replaced taxable income with gross receipts, plus lets companies apply the credit against payroll withholding or income tax. "Usually companies don't have a lot of net income or tax liability in the first five years," Green says. "We want to encourage and drive innovation in Georgia."

Gant notes less than 20 percent of Georgia corporations are not paying any income tax, "so job credits became useless to most of them." Applying it against withholding "allows companies to monetize the tax credit," he adds.

During last month's BIO International bio-tech convention in Atlanta, Green says, the R&D changes were "one of selling points when we talked with companies. This is an industry driven by innovation, and typically there is a long lead time before they have a product and revenue. Those companies saw this as a benefit, and they are the type of companies we want to encourage to grow in Georgia."

The Quality Jobs Tax Credit repurposes the former headquarters tax credit to focus on quality jobs. The tax credit goes to those bringing in new jobs that pay salaries at least 110 percent above the county wage average. "We want to incentivize the quality jobs we want to offer Georgians," Green says. Higher wages mean more income, sales and property taxes. By attracting higher paying jobs, Green added, "We know we can generate positive revenue for the state."

The other legislation (HB 438) modified the Mega tax credit, which had previously mainly focused on manufacturing. The prior Mega credit went to companies adding 1,800 new jobs and making a capital investment of at least $450 million. The new provision allows companies to also qualify with 1,800 jobs and a $150 million payroll. Green says, "For a technology or financial company, or a global headquarters, it is difficult to reach $450 million in investment even with 1,800 jobs. This is more realistic for them."

With the new statutory incentives in place, Gant says, "An area where we still have some work to do is on the discretionary incentives." Green says the question of discretionary incentives challenging in the metro area, as "there is a different chamber in each county and they all handle how they incentivize projects differently. Everybody would like to have more discretionary funds, but we're going to live within the budget the General Assembly gives us."