A new bill that would create a venture capital fund for the state of Georgia has just hit the state Legislature, carried by state Rep. Allen Peake, R-Macon.
The Invest Georgia Program would allow insurance companies to buy a break on some of their state taxes, which could generate as much as $200 million over three years for the state to channel into Georgia small business ventures.
“This is a jobs creation bill,” said Peake.
It works via a tax credit. The insurance companies would pay a minimum of 85 cents on the dollar for a credit on certain taxes, depending on the price fetched by auction. The state would then take what it earns in the auction and shift it toward small Georgia-headquartered businesses with fewer than 100 employees.
Many states have such funds. Their rationale for offering a tax break is that they can collect tomorrow’s tax revenue today to start investing. Under the Georgia plan, the companies can sit on the tax credits as long as they like, saving them for a rainy day.
Peake said small businesses are hurting for capital because banks aren’t lending like they once were.
A third-party experienced investment firm would actually decide where to invest, subject to a couple of rules. Besides being small and growing roots in Georgia, the funds must go to industries like health care, technology or advanced manufacturing, among others. Retailers, real estate developers, stadiums, financial or professional service firms, and mining companies need not apply.
The bill also requires private matching funds for any investment, either 10 percent or 50 percent, depending on the size of the target company.
It might not be clear why venture capitalists would want to partner with state money instead of earning all of the money themselves. But Peake pointed out that in other states, where it’s legal, venture capitalists often partner with pension firms simply to get access to more capital.
Besides, for the venture capitalists, having a partner “spreads their risk,” he said.
The state’s fund would own equity in the target firms -- that is, own an actual piece of the company. The state would recoup its money and pick up any profits when the target company refinances, goes public or otherwise grows to use other capital sources.
The bill would create an appointed board to choose the third party that will do the investment work. The board will have eight members. Only five will have voting power, and they would be appointed by the governor, the House speaker and the lieutenant governor.
The state would auction a total $200 million in tax credits over the three years from 2014. If each credit sold for the absolute floor price of 85 cents, the state’s lost revenue would amount to a maximum of $30 million.
Peake’s model is the InvestMaryland program, which aims to raise $70 million to $100 million in its first-ever tax credit auction, to be held this March.
Georgia House Bill 718 has been sent to the House Insurance Committee for hearings.
Bill to allow hunting with silencers
A new state Senate bill proposes rescinding the ban on hunting with silencers, making them legal on any gun that’s approved for Georgia hunting.
“There have been some complaints about noise, about hunting in proximity of residential areas,” said state Sen. Jeff Mullis, R-Chickamauga, one of the bill’s signers. “You’re not supposed to hunt near residences,” he added, “but you can hear a shot a mile away.”
He also called Senate Bill 301 “pro-gun legislation” and said “I’m a pro-gun guy.”
The proposal now goes to the Senate Committee on Natural Resources and the Environment for hearings. Committee Chairman Ross Tolleson, R-Perry, already has signed onto the bill.
Macon senator pushes increase in college bonds
State Sen. Cecil Staton, R-Macon, is carrying a new bill that would let Georgia’s colleges and universities borrow $200 million for certain infrastructure projects. It only applies to “special projects that have revenue tied to them,” such as parking lots or recreation centers, Staton said.
Because the state prioritizes academic resources like classrooms and libraries in the general budget, schools and colleges borrow on a separate account for other facilities, through the Georgia Higher Education Facilities Authority. That borrowing is now capped at $300 million. Staton said they’re reaching that cap, so he’s asking for that figure to be raised to $500 million. Staton’s Senate Bill 302 has been sent to the Senate Appropriations Committee, of which he is a member. A hearing has yet to be scheduled.
House panel OKs delay in career path program
The Georgia Department of Education would be able to wait a year before having to follow a law requiring that students pick a career path by ninth grade under a bill House lawmakers gave preliminary approval to Thursday.
Members of the House Education Committee voted unanimously to send the bill forward to the Rules Committee, which will decide whether the legislation gets a vote on the House floor.
The law requires ninth-graders to settle on a job in one of 17 broad fields, or career pathways, such as agriculture, education and finance.
Group pushes ethics reform at Legislature
An activist group announced Thursday they are pushing for tougher ethics reform to level the playing field among lawmakers, citizens and lobbyists and are urging Georgia voters to do the same.
The Georgia Alliance for Ethics Reform is proposing legislation to cap lobbyist spending on lawmakers at $100 and ban public officials and their family members from serving on the state ethics board or holding government contracts.
Ethics reform became a high-profile issue at the state Capitol after a scandal involving former House Speaker Glenn Richardson that ultimately led to his ouster.
The Associated Press contributed to this report.