Bartow and Gordon counties are among the Georgia communities keeping their share of a tax on the energy used in manufacturing, but the Floyd County Commission has yet to make a decision.

The Rome City Commission could opt to impose it within the city limits if the county does not take action.

“I personally feel that by not implementing it, it will make Floyd County more competitive over counties that do implement it,” County Commission Chairman Irwin Bagwell said.

Gov. Nathan Deal, a Republican, signed a tax package this year gradually phasing out a 4-percent state tax on the energy that manufacturers use to produce their goods. Manufacturers typically pay another 2 or 3 percent in taxes on that energy to local governments. The Republican lawmakers who backed the bill allowed local officials to create a new tax that phases in as their share of the energy tax disappears.

While no one officially tracks how many counties have imposed the tax, several counties did take that step before the beginning of the four-year phase-out.

“I just didn’t see the county could take that kind of hit,” said Clarence Brown, the sole commissioner for Bartow County, which imposed a tax. “That was just too much.”

He noted that local manufacturers will still benefit from reduced state taxes, even if their local taxes stay the same. Brown said no firms have complained to him.

“I think they realize how bad the shape Bartow County is in,” he said. “They want the fire trucks and the ambulances to keep rolling.”

The Gordon County Commission approved a local tax in early November. In weighing the pros and cons, County Administrator Randall Dowling noted the loss would affect revenue for both the SPLOST program and the local option sales tax used to offset property taxes.

“And, remember, this is not a new tax,” he said. “It’s keeping what we’ve had for decades.”

Floyd County is still struggling to close an $830,000 deficit in its 2013 general fund budget. County Manager Blaine Williams said that includes $80,000 cut from projected sales tax revenue because of the beginning of the phase-out.

“I went on the assumption you won’t implement it,” he told the board in presenting the draft budget. “Keep in mind, more will continue to drop off each year.”

Bill supporters have urged local communities to get rid of the manufacturing tax altogether. Lawmakers opted to give the locals a choice to keep the tax revenue as a political compromise when local governments objected to losing it, said Rep. Mickey Channell, the Republican chairman of the House Ways and Means Committee.

Channell said cutting the tax will encourage energy-intensive manufacturers to stay or expand their operations in a community. That’s what Bagwell is counting on in Floyd County.

“By attracting one small industry, we could offset any loss in revenue,” he said. “Our existing industries also need the ability to remain competitive over their sister plants in other communities.” 

Manufacturers are more cost conscious now that the economy is weak and facilities are producing less than their actual capacity, said Roy Bowen, president of the Georgia Association of Manufacturers. As a result, firms are looking for opportunities to consolidate manufacturing operations and save costs. Costs, including local taxes, are a factor when firms decide which plants to shutter.

“The county that imposes the tax is going to be the first to have layoffs and curtailments,” Bowen said. “And they’re going to be the last county to ramp up.”

Of course, giving a tax break to one group can mean less money for other purposes. Troup County officials voted unanimously in October to impose a new tax to keep money that would otherwise be lost to the new tax break. County officials estimated the tax break would have cost $700,000 to $900,000 once it totally vanished, or as much as 2 percent of the general budget, said Troup County CFO Scott Turk. Money generated by the tax is used to pave and resurface roads and build bridges.

The local government has already cut 30 jobs in the last year.

Crisp County has also opted to keep its share of the tax, said Commissioner Wallace Mathis, who described himself as an anti-tax Republican.

In addition to financial losses caused by the Great Recession, Mathis said his community lost money when a construction project on Interstate 75 reduced the number of travelers stopping in Cordele, driving down sales tax collections. While businesses have to pay the tax, they also get public benefits, he said. For example, local tax money has been used to extend roads and sewer lines to plants. Mathis said abruptly taking away the money would endanger the ability of local governments to pay back loans for already approved infrastructure projects.

“When you just come in and knock out a tax like that, the revenue’s got to come from somewhere,” he said.