Savannah Chamber

22 8 Due to the build out of previously announced advanced manufacturing projects, Georgia will see increases in advanced manufacturing production and employment. Advanced manufacturing projects announced in 2022 include Aspen Aerogels, Trenton Systems, Boehringer Ingelheim, Hyundai Motor Group, Qcells, Boston Scientific, Anduril Industries, and Denkai America. Advanced manufacturing projects announced in 2021 include Nano PV, NANTRenewables, KB Autosys, IC Biomedical, Pregis, Amcor, Inc., Intuitive, SK Group, Micron Technology, and Rivian. Effective economic development policies as well as rising wages and production costs in China – and other overseas locations – are factors that support Georgia's manufacturing sector. Concerns about trade policies, product quality and management of the risks associated with increasingly complex – time-sensitive – supply chains also make manufacturing in Georgia more attractive than manufacturing overseas. Additional factors that will help Georgia attract manufacturers include a superior transportation, logistics, and distribution infrastructure, low costs of doing business relative to other highly developed economies, a favorable tax structure, highly ranked colleges & universities, excellent work-force training programs such as Quick Start, and very competitive economic development incentives. Prospects for State and Local Government In 2022, higher revenue collections and federal largess reversed the downturn in state and local government jobs. The 2022 upturn in hiring by government was much delayed compared to hiring in the private sector of the economy. In addition, the upturn was not vigorous because it was well understood that stimulus funds received by state and local governments from the federal government were unlikely to repeat. Surpluses therefore are better used to cover one-time or temporary expenditures instead of new programs or new hires. Nonetheless, state and local governments contributed to 2022 employment growth and will do so again in 2023. A recession will slow growth in state government revenue collections, but high inflation should help prevent a decline in revenue collections. In 2023, local governments' revenue collections will increase strongly due to the lagged effects of the housing boom on property tax digests. Another reason why state government will not hire many new workers is that long-term fiscal challenges loom for state government. The biggest long-term challenge for state government financing is uncertainty regarding federal funding for mandated programs, especially Medicaid. The second biggest long-term challenge is an antiquated tax structure that increasingly does not line up with the state's shifting economic structure. Consequently, when Georgia's economy expands state taxes do not generate as much revenue as a similar expansion would have generated in the past. T his systemic slowdown in revenue growth is unlikely to go away without comprehensive tax reform. The fiscal situation facing most local governments is better than the situation facing state government. In most jurisdictions, local government will boost hiring faster than state government. Compared to state government, local governments depend very heavily on property taxes and fees for services and less heavily on sales and income taxes. Revenues generated by property taxes and fees usually are less cyclical than revenues generates by sales and income taxes. Due to the post pandemic-recession housing boom, most local governments will generate revenue sufficient to sustain and expand programs. In 2023, we expect residential real estate prices to decline moderately, but assessed residential property values will increase because such values lag market prices by a year or more. In 2020-22, there was heavy spending for major home improvement projects (e.g., swimming pools) that will add to residential property tax digests. In addition, new home construction has been on the upswing, which will lead to the expansion of property tax bases as projects started before the recession began are completed.

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