State Chamber Focusing On Preserving Pro-Business Climate In Georgia

Tuesday, March 31, 2009 - 01:00

The Editor interviews George M. Israel, III, President and CEO, Georgia Chamber of Commerce.

Editor:Mr. Israel, would you tell our readers about your professional experience?

Israel: I joined the Georgia Chamber of Commerce as President and CEO in 2002. My career started in financial planning, and I served as Mayor of Macon, Georgia from 1979 through 1987. Since that time I have done a number of things including turnarounds for companies financed by banks and serving as CEO of a real estate development firm and a health care provider.

Editor: Please give us an overview of the Georgia Chamber of Commerce and how it functions.

Israel: We are the largest business advocacy organization in Georgia with about 4000 members. Our organization has almost doubled in size since I came here in 2002. We lobby at the state level on issues that are important to Georgia business including transportation, education, health care, civil justice, energy, taxation and employment. Two years ago, we launched an effort called the Georgia Initiative, which is designed to make us more proactive. As part of that, we have formed nine policy committees to actively explore needed policy changes, such as where we need to go with further tort reform and other legal issues. About 15 in-house counsel for Georgia companies are actively involved in the initiative.

Editor: Does the Chamber have an overriding business philosophy that you would like to share with our readers?

Israel: We want our state to continue to be a place where business can thrive and people see opportunity. Business is the backbone of our economy, and we want to shape policies that will help preserve Georgia's strong pro-business environment.

Editor: Could you tell us about Georgia's workforce and educational advantages?

Israel: One of the advantages we have in Georgia, educationally and workforce-wise, is the HOPE scholarship, which is financed by the Georgia Lottery. It has had a tremendous impact by stopping the brain drain from our state. Our brightest and best students are going to Georgia institutions of higher education, and we are proud of the quality of graduates they turn out. We also have a strong technical school network for adult technical training. Our Work Ready program also helps us economically because an employer who moves to this state can have its employees trained on its own equipment and the State of Georgia pays for that training. A newer program is our career academies, which are gaining popularity and have been extremely beneficial by offering different educational tracks for high school students. These things have definitely given Georgia an advantage.

Editor: The Georgia Chamber of Commerce was instrumental in establishing a special business court to handle complex business litigation. Is such a specialized court unique to Georgia, and can you describe how it functions within the state's judiciary system?

Israel: The business court is not unique to Georgia; for example, New Jersey, New York, and North Carolina also have specialized business courts. We worked with the Georgia Supreme Court to have a pilot court funded in Fulton County (Atlanta), because of the volume of business litigation. There is also a good amount of business litigation in other metro area counties and in the City of Savannah, which are other areas we have talked about expanding into using a circuit-court-type judge. The problem is that business cases often get bumped for other matters, and that costs companies time and money. The pilot program has been in place since 2005, and it has been extremely successful. Those who have used it have given it high marks, and we hope to expand the program statewide.

Editor: Georgia is one of about 22 right-to-work states. Could you discuss the advantages of that system? Has the Chamber announced its opposition to the pending EFCA legislation?

Israel:Our organization strongly opposes EFCA and we are actively working with a number of partners to prevent its passage. There are many advantages to a right-to-work system. For example, employees have the right to work without being subjected to union dues being taken out of their salary. The employer has the ability to set the rules in the workplace and determine salaries, establish benefit programs and work conditions, which gives our businesses more flexibility and makes them much more competitive. Just looking at the auto industry in the United States, one of its difficulties is that it does not have the flexibility that some foreign employers who have moved into the Southeast in right-to-work states have. Locating here, they are not beholden to the defined, siloed job descriptions that the union insists on, and they don't have the legacy costs that some of the automakers have. It gives them so much more flexibility to adapt to market changes that they have been able to simply outmaneuver the Big Three.

Editor: Isn't there an inherent conflict with EFCA, and if it is enacted, how is that going to affect the states that do have right-to-work systems?

Israel: There will be a conflict. I think that federal law will trump state law in the 22 states that have become right-to-work regimes. It will make us less competitive as a country; it will make it very difficult for those manufacturers that have located in the South. They will go somewhere else, probably to Mexico or South America. The main thing that EFCA is going to do is take away the secret ballot, which to me should be sacred from anyone's standpoint.It would negate right to work and put everyone with ten or more employees under threat of unionization.

Editor: Georgia adopted a package of legal and civil justice reforms in 2005. Could you describe how these reforms have affected Georgia's business environment and is there any further significant reform legislation on the horizon?

Israel: There were two bills passed in 2005. One dealt with class action suits and allows for an immediate appeal for certification to the Supreme Court to determine if there was indeed an injury in a particular action, if the class was injured, and if the action constituted sufficient grounds for a class injury or class tort. We'd seen a growing number of class action suits in Georgia, and our companies have been able to take advantage of this new law and protect their assets and their stockholders from needless negative impact. The other was an omnibus tort reform bill that provided for the elimination of joint and several liability, provided for offer of judgment or offer of settlement, raised the standard for bringing action resulting from emergency room care to gross negligence, and limited liability for non-economic damages in medical malpractice cases. It also introduced an expert witness rule.

This reform has helped limit the losses in Georgia. We track medical malpractice closely and it has cut down on the volume and reduced the awards, so it's done pretty much what we had hoped it would do. It has also helped bring more insurance medical malpractice carriers back into the state; at one point we were down to three, and only one that was writing new business. Now six medical malpractice companies have been admitted to the state, and that competition has helped to drive down some of the premiums.

While we think the results have been positive, we would like to go further. We are currently doing research to determine what additional reforms would have the most favorable economic impact.

Editor: How has the current economic crisis affected the business landscape in Georgia? Does the Chamber advocate any positions or actions intended to address this challenge?

Israel: It has impacted us. Our unemployment rate is about one percent above the national average. Historically, those numbers have been reversed in recessions, but housing has been particularly hard-hit, and we also have a lot of banking institutions in Georgia that have regional headquarters here. We are in the field right now with a survey designed to get a better handle on how our members are being affected and how they are working through this recession. We have seen job cuts and delays in capital investment, and we've seen a reduction in employee benefits. We have also seen some closures. Our role is to make sure policies are being put in place that will help our companies recover as quickly as possible. There is pending legislation this year to incentivize companies to move here and create jobs, and we are working hard to help that pass.

Editor : Is the car manufacturer Kia located in Georgia?

Israel: Yes, Kia, which is located in La Grange on the Alabama border, is on schedule to open late this year. It will add 2,500 direct jobs and another 4,000 indirect jobs through suppliers. There have also been a number of new housing starts in the area. No question, it will have a positive impact.

Editor: What do you expect to be the most critical state legislation in the coming year in advancing Georgia's economic growth?

Israel: One is going to be transportation. We hope to get a transportation funding bill passed this year that will allow us to invest in our transportation infrastructure. For example, we have the fastest-growing port in the country, the port of Savannah. Its volume is projected to quadruple over the next ten years. I tell folks to count the number of 18-wheelers on our major highways today and multiply that by four. That is just one example of why we need improved transportation programs for our state.

Another is trauma care. Georgia has some significant holes in our trauma network. There are bills currently under debate that would provide about $80 million to shore up the trauma network in our state. There is also some good workforce development and economic development legislation that we're working with the Department of Economic Development and others to get passed.

Finally, we want to make sure that our state maintains a balanced tax structure. We would like to see tax reforms that would provide additional relief to business. Taxes on businesses have gone up over the years. It's not overt, but it occurs when elected officials enact - usually at the local level - exemptions from education tax, homestead exemptions, or exemptions for senior citizens. That has the impact of increasing the burden on business, which is not usually able to take advantage of those exemptions. So we will continue to work towards balanced tax reform. On the federal level, the things we're most concerned about right now are the Employee Free Choice Act and the proposed carbon tax, which will have a chilling effect on all states in the South because we are so dependent on coal-fired utility plants. We also know there will be debate around health care. We fight health insurance mandates on the state level, but we see mandates coming from the federal level and potential increased cost if the country goes to a single-payer system.

Please email the interviewee at gisrael@gachamber.com with questions about this interview.