Infrastructure, housing a drag on Georgia’s economic development
The results are in, and Georgia remains a veritable economic engine. For the 12th consecutive year, Area Development Magazine named the Peach State the best place for business. “While we’ve earned this ranking for over a decade,” Gov. Brian Kemp said in a statement, “it’s by no means guaranteed. It is a reflection of the sustained commitment we have to excellence and a team approach to economic development.”
Policymakers from both sides of the aisle are quick to tout this proud distinction, and they should. It has taken serious dedication to claim the magazine’s top spot. However, continuing to hold this accolade without addressing mounting infrastructure and housing troubles will be challenging, especially with Georgia currently growing and attracting investment at a breakneck speed.
“Between July 1, 2024, and June 30 of this year, [the Georgia Department of Economic Development’s] Global Commerce team supported 423 facility expansions and new locations. These commitments represent more than $26.3 billion in investment, a new record, and 23,200 new private-sector jobs over the next few years,” according to the governor’s office. After years of pro-business policies, it is not surprising that the Peach State’s population has surged by nearly 13% from 2010 and 2022.
Beyond this, tourists are flocking to Georgia in increasing numbers. “A record 174.2 million domestic and international visitors in calendar year 2024 spent $45.2 billion on Georgia’s hotels, restaurants, recreation, transportation, and other local businesses, surpassing the previous record set in 2023 by nearly 4%,” reads a governor’s office statement.
While this bodes well for the economy, new businesses and citizens apply added pressure on our infrastructure and faltering housing market. Without remedying these matters and expanding capacity, continued growth could stall. After all, why would anyone move here if they cannot find housing and why would businesses invest here if infrastructure is aging and/or nearing capacity? Therein lies the problem.
The American Society of Civil Engineers grades every state’s infrastructure, and Georgia’s score was underwhelming. We received an overall C+, with drinking water getting a C+, roads a C+, dams a D+, transit a D and so forth. Anyone who has driven through Atlanta has seen the sad state of our roads, and they are bursting at the seams.
The state’s capital has the country’s eighth worst traffic, and nine of the nation’s 100 worst traffic bottlenecks are in the metro area. Drivers in Atlanta lose an average of 65 hours to traffic delays a year, which costs them $1,164, and the miles driven per capita in the Atlanta metro area jumped by 16.9% from 2019 to 2024. It’s not just Atlanta, but much of the rest of the state battles traffic congestion too. This impacts daily commuters and truck drivers alike, which could serve as a disincentive for further private investment in Georgia as does the state’s housing market.
Georgia is suffering from an acute housing shortage and affordability problem. There is currently only a four months’ supply of homes for sale, which is two months shy of a healthy market, and costs have skyrocketed, which has put homeownership out of reach for many. As of last month, the median home sale price was over $390,000—$156,000 more than in January of 2020. Unsurprisingly, what homes are for sale languish on the market for about 58 days—14 more days from a year ago.
These realities challenge Georgia’s ability to continue attracting the same level of talent and investment. As I have written before, there are only limited ways the state can improve the housing market, since the federal government’s meddling has greatly contributed to its woes, but state lawmakers can take some concrete steps. Namely, they can curtail local building moratoriums and cut burdensome red tape and fees on new construction to spur much-needed development.
As for updating and expanding the state’s infrastructure, that promises to be a formidable task that could prove massively expensive. While there are plans to create more Peach Pass Lanes to bypass traffic, thanks to public-private partnerships, most other relevant infrastructure projects would be funded with taxpayer money.
Unless the state Legislature plans to spend down the rainy day fund, you shouldn’t expect the lawmakers to dole out additional taxpayer money to conduct a statewide overhaul anytime soon. State tax collections are only up by 0.1% from last fiscal year, federal money might be in short supply and Kemp has warned agencies not to expect funding increases this year.
Unsure times require conservative budgeting, and keeping pace with Georgia’s growth and business demands requires creativity and a delicate balancing act. If Georgia’s policymakers want to continue the state’s reign as the best place for business, then they have their work cut out for them.