Texas tops list of business-friendly states

Chief Executive, The, Jan-Feb, 2005

CORPORATE LEADERS find a dramatic difference in business conditions among the 50 U.S. states and the District of Columbia on the basis of tax rates, regulatory environments, growth rates, work force attitudes and quality of life issues.

By far, the states identified as the worst in our polling were California, New York and Massachusetts. Out of our 458 respondents, 182 cited California as the worst, while only 65 cited it as the best, for a composite score of -117.

At the opposite end of the spectrum were Texas, Nevada and Florida. Thirteen readers said Texas was the worst state, but they were overwhelmed by 104 who said it was the best. That resulted in a composite score of 91, which means there is a more than 200-point spread in respondents' opinions about Texas versus California.

"In the three most unattractive states, regulations run amok," said one respondent. "California has more onerous laws, although Governor Schwarzenegger has made steps to reverse this trend. These states probably have the highest number of lawyers as a percentage of the population and are welfare entitlement states."

Many California CEOs reported that they have been contacted by state governments as far east as the Carolinas to offer tax incentives, free job training and other benefits to move to their states. "California seems to be trying to push business away from the state," groused one reader.

Recent actions by the attorneys general of New York and California provoked negative commentary. "The current attacks are making it impossible to conduct business in those states," said one respondent. "They are taking a few situations and painting my entire industry with a broad brush."

Jeff Downing, president and CEO of Ohio Star Forge in Warren, Ohio, was typical in how he analyzed different states. "Attractive states are friendly toward business and want to help business succeed," he wrote. "The work force is motivated and the state is actively involved. "In contrast, Downing wrote, "the least attractive have work forces with entitlement attitudes, low motivation, unions, low state support, high taxes and lousy politicians."

There does seem to be some correlation between CEO attitudes and economic and population growth rates. Nevada is the fastest growing state in the nation, and Massachusetts is losing population as economic activity shifts south and west.

Chief Executive will conduct this annual survey again at the end of 2005.

RELATED ARTICLE: The Best and Worst States to Do Business in the U.S.

[GRAPHIC OMITTED]

5 Best States

                 Rating

Texas            91
Nevada           75
Florida          75
Arizona          56
North Carolina   52

5 Worst States

                    Rating

California          -117
New York             -93
Massachusetts        -70
Washington, D.C.     -29
Hawaii               -27