New GBPI Report – CAPCO: A Bad Investment for Georgia

For Immediate Release        

ATLANTA (January 10, 2012) – According to the new report, CAPCO: a Bad Investment for Georgia, released today by the Georgia Budget and Policy Institute (GBPI), dismissing CAPCO is a necessary first step toward developing reasonable “venture capital policy” in Georgia.

Many Georgia policymakers and business leaders contend the state has a shortage of venture capital and some are considering CAPCO legislation, a $125 million tax credit program, to fix it. Addressing the state’s shortage of venture capital in a fiscally-responsible manner could be an important component in strengthening Georgia’s economy and creating jobs; however, the CAPCO model is a fundamentally-flawed method for doing so.

“The reality is that a broad consensus of academics, agency officials, journalists and informed policy makers has found CAPCO to be an ineffective and inefficient use of taxpayer dollars,” said Wesley Tharpe, GBPI Policy Analyst.

“CAPCO is a bad investment for Georgia,” said Alan Essig, GBPI Executive Director. “Several states have documented its poor performance, its impact on job creation is negligible, and even worse, it reduces state revenue. State leaders must exercise extreme caution when trying to address this issue. State funds today are stretched exceedingly thin and core areas of the state’s budget – such as education and public safety – have endured deep cuts for years. Allocating Georgia’s scarce resources to a poorly-thought-out or inefficient program would do more harm than good. It would further divert funding from areas critical to our economic health, while receiving little or no benefit in return.”

“Despite the assertions of some CAPCO advocates, there are several possible alternatives to explore,” said Tharpe. “Ultimately, If Georgia’s leaders intend to create a new venture capital fund program, they must tailor it to meet Georgia’s specific needs rather than embracing any prepackaged model solution.”

The GBPI’s report provides an overview of the CAPCO legislation, how it works, and why it’s bad public policy. The report also offers some guiding principles for how to address the state’s shortage of venture capital. Visit the GBPI website to download the full report.

Related blog post:
CAPCO: Trading Your 401K for Nothing

Media Contact:
Utoia Wooten
uwooten@gbpi.org
404.420.1324 ext. 109

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About the Georgia Budget and Policy Institute
GBPI is the state’s leading independent, nonpartisan nonprofit engaged in research and education about the fiscal and economic health of the state of Georgia. GBPI provides reliable, timely analysis of Georgia’s budget and tax policies, and promotes greater state government fiscal accountability, improved services and an enhanced quality of life for all Georgians.

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