Tax Incentive Evaluations

The evaluations are intended to provide objective information regarding an incentive’s impact on the state’s economy and budget. This information can help decision-makers and the public assess an incentive’s effectiveness and compare with other incentive programs.

The chairpersons of the Senate Finance Committee and the House Ways and Means Committee select incentives to evaluate. Under O.C.G.A. § 28-5-41.1, each committee chair can select up to five tax incentives each year.

Beginning January 1, 2025, each chair can select up to six tax incentives each year. However, an evaluation must be conducted for any credit or exemption scheduled to sunset within two years from July 1 of the evaluation year, if the tax expenditure is at least $20 million annually. Evaluations of sunsetting provisions may reduce the number of requested reviews.

O.C.G.A. § 28-5-41.1 provides for analyses of tax exemptions, exclusions, deductions, credits, deferrals, rebates, abatements, and preferential rates. Each request shall address “one existing provision of law or proposed law.”

DOAA used the state’s standard Request for Proposals process to select the following contractors:

• Georgia Southern University Center for Business Analytics and Economic Research (CBAER)
• Georgia State University Fiscal Research Center (FRC)
• University of Georgia Carl Vinson Institute of Government (CVIOG)

In conjunction with the Department of Administrative Services, DOAA managed the identification and selection of contractors to perform the evaluations.

Beginning January 1, 2025, DOAA must include a list of the analyses to be conducted each year and provide a mechanism for intended beneficiaries to provide information for use by the researchers.

On an annual basis, DOAA defines potential conflicts of interest for contractors and secures an attestation of independence from each prior to assigning the incentives. DOAA also assists the contractors with data needs at state agencies as necessary.

With the contractors’ input, DOAA creates a general outline for the reports to improve consistency. DOAA reviews the report draft for each incentive and provides comments as needed. Final decisions about report methodology and report content are made by the contractors. Final decisions about report methodology and report content are made by the contractors.

Based on the contractor’s report, DOAA creates a one-page summary for each incentive evaluation. DOAA has also created a report summarizing the evaluations of the business tax incentives, which can be found here.

O.C.G.A. § 28-5-41.1 requires the evaluations to include:

• An analysis considering whether the provision is accomplishing its stated or intended purpose;
• Net changes in state revenue, state expenditures, and economic activity (as part of these items, contractors may include indicators such as cost per job or return on investment);
• A comparison to similar provisions in other states;
• An assessment of the extent to which modifying or terminating the provision would affect beneficiaries and the state’s economy;
• A description of ancillary impacts (e.g., public safety, education, infrastructure) of the business activity; and
• Recommendations for improving the state’s return on investment.

The models may vary by incentive, but the contractors frequently use IMPLAN. IMPLAN is an economic modeling system that estimates the impact, or ripple effect, of a given economic activity within a specific geographic area. If applicable, totals include the direct effect of the economic activity being incentivized, as well as the indirect effect of suppliers and the induced effect when employees spend their wages. The economic measures reported include jobs, labor income, value-added, and economic output.

The contractors also estimate the amount of the economic activity attributable to the incentive. For example, researchers estimated that 21% of low-income housing units built between 2000 and 2009 were due to the state’s low-income housing credit, so 79% would have been built without it.

Here are the links to DOAA’s recent reports on tax incentives. While some reports address incentive impacts, others focus on their administration.

• Rural Hospital Tax Credit – June 2024
• Qualified Education Expense Tax Credit – June 2023
• Rural Hospital Tax Credit – May 2023
• Rural Hospital Tax Credit – April 2022
• Georgia Agribusiness and Rural Jobs Act – December 2021
• Qualified Education Expense Credit and Student Scholarship Program – January 2021
• Rural Hospital Tax Credit – December 2020
• Impact of the Georgia Film Tax Credit – January 2020
• Administration of the Georgia Film Tax Credit – January 2020
• Rural Hospital Tax Credit – December 2019
• Georgia Agricultural Tax Exemption – October 2017

You can also search here and filter the Report Type to Tax Incentive Reports.

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