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Saturday, November 27, 2010

Texas, California, and Business Climate

Our chapter on federalism discusses competition among states for business. Chief Executive reports:

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.

“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.”

Texas Governor Rick Perry says that 153 businesses have moved from California to Texas this year. Politifact examines the claim, which comes from a study by Dun & Bradstreet:
Mark Muckerman, D&B government relations director, told us that the company conducted an internal exercise — most of which he said has not been shared outside the company — of "interstate moves of business locations," or businesses that have relocated out of state. He said that 153 businesses relocated from California to Texas from January through August.

However, Muckerman said, the D&B count does not mean that 153 individual companies pulled up stakes in California to settle in Texas. Muckerman offered this example: If one company with five offices in California keeps its headquarters in state and moves its branches out of state, including one to Texas, that would figure into the D&B count that Perry cites.

Muckerman revealed one other caveat. He said the "interstate moves" don't include new business locations. So if a California company decided to open a brand-new packaging facility in Texas, it wouldn't be counted among the businesses that have moved from California to Texas.

Muckerman said he didn't know how Perry learned of D&B's internal report though he presumes someone at D&B spoke to someone in the governor's office.

We wondered how many business sites moved from Texas to California. Muckerman told us there were 92 such moves, leaving Texas with a net gain of 61 business sites from the Golden State.