Gov. Perry - A Fiscal Conservative

More than 600 CEOs rated states on a wide range of criteria from taxation and regulation to workforce quality and living environment, in our sixth annual special report.

In Chief Executive’s annual survey of best and worst states for business, conducted in late January of this year, 651 CEOs across the U.S. again gave Texas top honors, closely followed by North Carolina, Tennessee and Virginia. They gave the booby prize for worst state to California, with New York, Michigan, New Jersey and Massachusetts filling out the bottom five-a line-up virtually unchanged from last year. Florida and Georgia each dropped three places in the ranking, but remain in the top 10. Utah jumped six positions this year to sneak into the top 10 at No. 9.

The business leaders were asked to draw upon their direct experience to rate each state in three general categories: taxation and regulation, quality of workforce and living environment. Within each category respondents graded states in five subcategories, as well as ranking each in terms of its importance to the respondent and how individual states measure up (Click here to see How CEOs Grade the States chart).

For example, Texas fares competitively with Nevada and Delaware in terms of taxation and regulatory environment, but scored best overall, in no small measure because of the perception that its government’s attitude to business is ideal. Runner-up North Carolina edged Texas slightly in its living environment, but scored somewhat below the Lone Star state in terms of government attitude to business and work ethic, which is a sine qua non for the business leaders. (Click here to see the chart) After employee work ethic, CEOs most highly prize lower tax rates and perceived attitudes toward business, followed by living environment considerations, such as real estate costs and education.

“Texas is pro-business with reasonable regulations,” one CEO respondent remarked, “while California is anti-business with anti-business regulations.” Another commented, “California is terrible. Even when we’ve paid their high taxes in full, they still treat every conversation as adversarial. It’s the most difficult state in the nation. We have actually walked away from business rather than deal with the government in Sacramento.”

“The leadership of California has done everything in its power to kill manufacturing jobs in this state,” observed another CEO. “As I stated at our annual meeting, if we could grow our crops in Reno, we’d move our plants tomorrow.”

How is it that the nation’s most populous state at 37 million, one that is the world’s eighth-largest economy and the country’s richest and most diverse agricultural producer, a state that had the fastest growth rate in the 1950s and 1960s during the tenures of Democratic Governor Pat Brown and Republican Governors Earl Warren and Ronald Reagan, should become the Venezuela of North America?

Californians pay among the highest income and sales taxes in the nation, the former exceeding 10 percent in the top brackets. Unemployment statewide is over 12.2 percent, higher than the national average. State politics seems consumed with how to divide a shrinking pie rather than how to expand it. Against national trend, union density is climbing from 16.1 percent of workers in 1998 to 17.8 percent in 2002. Organized labor has more political influence in California than in most other states. In addition, unfunded pension and health care liabilities for state workers top $500 billion and the annual pension contribution has climbed from $320 million to $7.3 billion in less than a decade. When state employees reach critical mass, they tend to become a permanent lobby for continual growth in government.

Bill Dormandy, CEO of San Francisco medical device maker ITC, summed it up: “California has a good living environment but is unfavorable to business and the state taxes are not survivable. Nevada and Virginia are encouraging business to move to their states with lower tax rates and less regulatory demands.”

Lone Star Leader

By contrast, Texas, the second-most populous state and the world’s 12th largest economy, is where 70 percent of all new U.S. jobs have been created since 2008. Unsurprisingly, it scores high in all the areas CEOs value most. “You feel like state government understands the value of business and industry to create jobs and growth,” observed one CEO. Its tax credits and incentives to business choosing to locate or expand are among the most aggressive. The Texas Enterprise Fund is by far the largest deal-closing fund of any state, with grants totaling $377 million disbursed in 2008.

Little wonder then that while Texas gained over 848,000 net new residents in the last 10 years, according to the Census Bureau, California lost 1.5 million. New York State’s net loss exceeded 1.6 million - the highest of any state. High-tax, big- government New Jersey ranked fourth, with a net loss of almost 460,000, enough to drop it from 10th to 11th place in population.

“The New York state legislature is the most dysfunctional in the land and one of the reasons why New York is the worst,” one exasperated New York City business leader volunteered. The political elites in the states that dismiss out-migration trends overlook the radical demographic adjustment underway. As higher-income earners leave, they are more often replaced by those with lower incomes and lower skills, many needing public assistance. Gone too are the entrepreneurs and risk-takers, off seeking regions where their job creating abilities are rewarded.

Another more daunting reality is in store. The so-called de-leveraging of America hasn’t reached government. U.S. cities and states have issued over $2 trillion in new debt since 2008, with another $1 trillion scheduled this year. The problem is that state revenues in real terms may not reach 2008 levels until late in 2012, according to John Thomasian of the National Governors Association Center for Best Practices. As he emphasizes in his paper, “The Big Reset: State Government after the Great Recession,” states will have to rethink and redesign government in terms of what is essential and what can be made more efficient if their citizens are to have much of a future.

The results of this survey may point the way.

http://www.chiefexecutive.net/ME2/Audiences/dirmod.asp?...

Thinking about starting a business but not sure where to locate it? The Small Business and Entrepreneurship Council (SBE) has just the thing for you - an index of how friendly each of the 50 states are in their tax codes to such endeavours.

South Dakota, Texas, and Nevada are the top three states with the most small-business and entrepreneur friendly tax systems, according to the latest edition of the index. To grasp just how difficult a task is facing Gov. Chris Christie's New Jersey is the worst state in the Index.

The index measures 16 different factors in rating an individual state, then assigns it an index number based on its composite performance on those factors. With the economy in the Great Recession, state tax policies are even more important to small businesses and entrepreneurs, according to Raymond J. Keating, SBE's chief economist and author of the index.

"The economy started to hit rough waters in late 2007. Lawmakers at the federal level made matters worse by imposing and pushing for increased tax and regulatory burdens that will raise costs for the entrepreneurial sector of the economy. Unfortunately, state lawmakers in many states have piled on with their own burdens. Indeed, many state tax systems send an unmistakable signal to investors and entrepreneurs that they would be better off doing business elsewhere," Keating said.

"Taxes at the state and local levels matter by diverting resources from and reducing incentives for productive, private-sector risk taking that generates innovation, growth and jobs. Quite simply, economic recovery will be restrained by high and/or increasing taxes, or boosted by low and/or falling taxes. Governors and legislators have a choice," he said.

The rest of top 10 states in the index include, in rank order from fourth to 10th: Wyoming, Washington, Florida, Alabama, Alaska, Ohio, and Colorado.

The rest of the bottom 10 states after New Jersey include, starting with 49th Minnesota, followed by California, New York, Maine, Iowa, Vermont, Oregon, Massachusetts, Rhode Island, and Hawaii.

New Jersey's only consoliation is that the District of Columbia would rank 51st if it were a state. For more on the Index, go here.

Read more at the Washington Examiner: http://www.washingtonexaminer.com/opinion/blogs/beltway...

A new opinion poll found Texas business leaders believe the state's economy is moving in the right direction, the national economy is on the wrong track and government regulations and rising health care costs are the top two issues facing the business community.

The new survey, which polled business and economic influencers who earn $100,000 or more, was conducted by Burson-Marsteller and Penn Schoen Berland.

The survey asked Texans on a broad range of key issues, from health care and energy to higher education and the environment. The poll stacked Texas opinions against national responses, noting some strong similarities, as well as some differences.

Texans believe the local economy is on the right track and the national economy is not, the report said. Conversely, the national elite believe by a slightly smaller margin that the national economy is on the right track.

“Texas is well known for its strong, pro-business climate,” said Mark Penn, president and CEO of Burson-Marsteller and president of Penn Schoen Berland.

“The Texas influencers we polled exuded confidence in the direction of the state’s economy, and a strong belief that Texas will continue to be a growing destination for national and international business."

Eight-three percent of Texans surveyed believe that private industry is part of the solution to the economic crisis rather than part of the problem, while just 67 percent of national elites believe that private industry is a solution, and 33 percent believe it is part of the problem in the economic crisis, the report states.

“A number of publications have rated Texas as one, if not the best place to do business. Governor Perry has worked very hard to attract business and jobs to our state, and I think those efforts are showing great results and this poll bears that out,” said Karen Hughes, Burson-Marsteller global vice chair.

This may seem like a dumb question: where is it good to be a young adult? The easy answer is everywhere. But some metro areas, starting with Austin, are kinda awesome.

The Southwest is the new frontier for young Americans—the region where those in their 20s and 30s have the best chance of establishing themselves in a recessionary economy.

Five Southwestern metropolitan areas, led by No. 1 Austin, rank among the nation’s 10 best places for young adults, according to a new Portfolio.com/bizjournals study.

Two qualities help Austin—the host of the annual South by Southwest music, film, and interactive conference and festival—to stand out among the nation’s largest metros:

— Two thirds of the nation’s major markets have fewer jobs now than five years ago, but Austin added 99,200 jobs during that span. Its annual employment-growth rate of 2.8 percent is the fastest in America.

— Austin has the strongest concentration of young people among the 67 metros. Twenty-eight percent of its residents are between the ages of 18 and 34. The median for the study group is 23.1 percent.

Washington, Raleigh, and Boston are the three runners-up in the study’s rankings of the best places for young adults. They’re followed by four Southwestern metros—Houston, Oklahoma City, Dallas-Fort Worth, and Tulsa—that occupy fifth through eighth place.

Portfolio.com/bizjournals analyzed the 67 U.S. metropolitan areas with populations above 750,000, searching for qualities that would appeal to workers in their 20s and early 30s. The study’s 10-part formula gave the highest marks to places with strong growth rates, moderate costs of living, and substantial pools of young adults who are college-educated and employed. (See the methodology sidebar for details.)

Here’s a quick look at the very best places—the top-10 metros for young adults.

1. Austin: Its attractiveness to young adults is broadly based, and it ranks among the 10 leading markets in five of the categories that were analyzed. This isn’t the first time Austin takes top honors in a Portfolio.com/bizjournals analysis. Earlier this year, the city was named the best city in which to launch a small business.

5. Houston: Employment opportunities abound in Houston, where the job-growth rate (1.7 percent per year) ranks among the five best in the nation. And so does its annual upswing in per capita income (6.6 percent).

7. Dallas-Fort Worth: The recession caused some backsliding in 2009, but Dallas-Fort Worth still has 206,000 more jobs than it did five years ago. Local population is zipping higher by 2.4 percent per year.

The least desirable market for young adults, according to the Portfolio.com/bizjournals study, is Detroit, which shares the pain of the major automotive corporations based there.

Detroit is saddled with the nation’s worst unemployment rate for young adults, the slowest rate of income growth, and the biggest decline in overall employment. A total of 343,700 jobs have disappeared from the Detroit area during the past five years. This isn’t the first time Detroit has come up short this year in a Portolio.com/bizjournals study: It came in last in the January analysis of small-business vitality and was the lowest-ranking major city in February’s review of U.S. wealth centers.

Two Midwestern industrial markets and two Sunbelt metros round out the bottom five. These areas may differ in geography, but they share a lack of attractiveness to young adults: Cleveland (66th place), Dayton, Ohio (65th), Tampa-St. Petersburg (64th), and California’s Riverside-San Bernardino area (63rd).