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Wednesday, March 23, 2011

Spring is in the Air!

Although it is normal to see the first signs of spring in late February in our region, I am not sure anyone could be any more excited by the blooms of the first yellow flowers popping out of the ground all around our beautiful community. To me one of the best attributes of our area is the weather. By the time we are tired of a season, the next one begins. And after another cold winter complete with one of the biggest snow storms in a number of years, we are on the verge of another amazing spring season.

Around this time last year, I wrote a column with a similar theme proclaiming that spring was close. I further wrote that economically speaking, we were close to turning the corner of benefitting from new growth in our economy. Our 2010 economic development scorecard illustrates the following successes:
- 340 direct new jobs were created in 2010 or 17.9% of our Grow Greater Dalton four year goal for new job creation
- An additional 161 indirect jobs were created or 12.2% of our four year goal
- A total of 501 jobs were created in 2010
- $28.2 million in new capital investment was invested in our community or 14.8% of our four year goal for capital investment

Our 2010 Economic Development achievements occurred as a result of attracting new investment from new companies locating in our community and simultaneously working with existing industry partners who made investments in expanding their operations. Communities that thrive typically do so through these complimentary strategies.

Although the achievements realized in 2010 were exciting, it is not yet time to celebrate or relax. The US economy, our state’s economy, and even our local economy are all far from being ideal. To use an automobile analogy, our economies are definitely not hitting on all cylinders.

Just as our weather senses the pending arrival of spring, I still believe our community is on the verge of real economic revival. Last year I reported that 2010 would be a success. And in many cases, that prediction was accurate. But it was still not a year for celebration given minimal improvement in many economic indicators.

One such indicator, unemployment in Georgia not only remains above the national unemployment rate but the difference between the two is growing. Locally, the Dalton MSA unemployment rate is higher than Georgia’s and the US. Budgets continue to be anemic for everyone ranging from individual families, local governments, school systems, non-profit agencies, small and large businesses, state governments, etc. The largest budget in the world (America’s) is also in peril and threatens an improving national economy and even our national security.

Just as a spring garden requires ideal conditions and preparation to be beautiful, economic success also requires ideal conditions and preparation. Businesses perform optimally when the unknown is minimized. Businesses, small or large, can make better business decisions when they can predict favorable outcomes. If they know the financial landscape, the regulatory environment, and what the marketplace needs, they can reasonably run their businesses by employing people, making their products, marketing their products, and realizing a reasonable return on their investment.

In today’s environment, the unknowns are paramount. For instance, many companies have tremendous cash on their books even after a number of years of terrible business results. And in many cases, these companies are seeing their sales increase and growing demand for their products. These positive conditions would normally mean that they would begin hiring again to meet the production demand for their products.

But due to many shaky economic statistics and lingering uncertainty in the marketplace, these companies are taking a wait and see attitude as it relates to increased hiring and expansion plans. Government policy at many levels is exacerbating this uncertainty in the marketplace.

At the federal level, maintaining reasonable tax rates for the long-term became politicized and these reduced tax rates were only maintained for two additional years. I deliberately say maintained and not extended for a purpose. The corporate tax rates that were reduced by the Bush Administration were appropriate. Given we have the largest corporate tax rates of any country except Japan; we need to remain as competitive as possible to keep business and industry here in the US.

In Georgia, we are also uncompetitive in today’s economic climate. Although property tax rates and sales tax rates are average, we also have an income tax that is higher than average. Add these all together, and we are not as competitive as some of our neighbors. The recent Tax Reform Council has proposed a reasonably thought out set of reforms, but our state government leaders do not seem inclined to pass the reforms or make any changes that will improve our competitiveness.

Although the news media spews doom and gloom, I remain encouraged that the American spirit will prevail. Just as Cherry Blossoms bloom against a cloudy and cold early March day; our spirit, our fortitude, and our belief in a better future for those who follow us will enable us to overcome the challenges of today. Our Nation, the State of Georgia, and Greater Dalton will once again bloom as beautifully as the most impeccably prepared and maintained garden.

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