Manufacturers across Georgia have been working to eliminate the sales tax on energy purchases for more than a decade, however, the law phasing the tax out over four years passed by the legislature earlier this year allows cities and counties to impose their own local version of the sales tax.

“This is going to be thoroughly discussed,” said Floyd County Commission Chairman Irwin Bagwell following a meeting with Floyd County, city of Rome and industry executives at the Greater Rome Chamber of Commerce this week.

Tom Watters, chief operating officer at Syntec Industries, told the government officials that House Bill 386 would have ramifications for more than 100 manufacturers in Rome and Floyd County.

“Implementation of this new excise tax would be akin to hanging the ‘Manufacturing Not Wanted’ sign in Floyd County,” Watters said.

Floyd County Manager Blaine Williams and Floyd County Finance Director Gary Burkhalter put together an estimate of the local revenue generated by a 1-percent sales tax on energy for 113 manufacturers, and the amount totaled $1,784,778.

Based on the negotiated split of the sales tax by local governments, Williams figures indicate the county would lose $1,008,399, the city of Rome would lose $744,252, and the city of Cave Spring would lose $32,126.

Williams projected the savings to industry could range from $10,669 for the smallest of manufacturers to $32,330 for larger manufacturers.

City Manager John Bennett said that at this point the most challenging part of the issue is not knowing exactly how much revenue will be lost.

“Cartersville, Calhoun and Dalton have utilities and they know to the penny how much it’s going to cost them,” Bennett said. “Our main competitors (in the region) have gas and electricity which they can negotiate.”

Ken Wright, director of business and industry services at the Greater Rome Chamber of Commerce, said the community could recoup the lost revenue from the energy tax by recruiting one large industry, but Bennett quickly pointed out that most new industries get a five- or 10-year tax abatement.

“What we are thinking about is the immediate impact,” Bennett said.

The statewide sales tax on energy will be phased out over four years. In 2013, 75 percent of the tax will be collected; 50 percent will be collected in 2014; and the amount drops to 25 percent in 2015 before the levy would go away completely in 2016.

If a local community were to adopt the excise tax in a bid to reclaim potentially lost revenue, that tax would be phased in over the same four years, with local communities getting 25 percent in 2013, 50 percent in 2014 and 75 percent in 2015. That way the tax commitment remains consistent for the manufacturers.

Rick Mills at the International Paper plant in Coosa told the group that IP looks at its expenses very carefully when it comes to making decisions regarding potential investments in its facilities.

“We count every square foot of board,” Mills said. “Any investment in the

plant would be a benefit to the community, and not having to pay a sales tax on energy used in manufacturing would be a plus for the Rome plant.”

“These decisions are going to affect our grandchildren,” Watters said. “If we can’t compete we won’t be here.”

He also said energy is the single most expensive cost for manufacturing, behind raw materials and, potentially, labor.

Hank Millsaps of Neaton Rome and Keith Grigsby from Suzuki also attended the meeting but did not offer any comments.

In terms of industrial recruiting, the elimination of the tax on a statewide basis removes one impediment that Georgia faced in comparison to other states in the Southeast. Whether or not local governments can afford to take another huge hit on the revenue side after five years of belt tightening remains to be seen.

“We’re going to continue to squeeze efficiency out of our government,” Williams said. “If you take the tax away, of course, you can imagine it gets a lot more drastic.”