Now don't blow it.
“The Lone Star State makes a triumphant return as America's Top State for Business — its third time at the top of our rankings,” CNBC announced on Wednesday. “In our sixth annual study, Texas racked up an impressive 1,604 points out of a possible 2,500, with top-10 finishes in six of our 10 categories of competitiveness. Texas has never finished below second place since we began the study in 2007.”
Those categories include cost of doing business, workforce, quality of life, infrastructure and transportation, economy, education, technology and innovation, business friendliness, access to capital and cost of living.
“This year's study comes amid slowly improving fortunes for the states,” CNBC explained. “A recovering economy coupled with lingering fiscal restraint following the Great Recession are helping states improve their finances for the first time in years.”
The Texas Public Policy Foundation's Chuck DeVore commends state leaders.
“CNBC's declaration of Texas as America's Top State for Business in 2012 — and for the third time in five years — validates the general policy direction of our state,” he says. “More tellingly, Texas was ranked in the top 10 states in six of the 10 categories, including oft-maligned areas such as workforce quality and infrastructure. Free markets and limited government provide a framework for people to achieve their dreams, and that is why both businesses and job-seekers continue to migrate here.”
“The state had to make some sacrifices though, and that hurt in some categories,” it said. “Texas comes in 26th in education and 35th in quality of life. And while the state held the line on income taxes, the overall tax burden — including property and sales taxes — is high. That hurts Texas in the all-important cost of doing business category, where it comes in 28th.”
This is important because of the looming battles over the budget, and even more importantly, over public school finance. Multiple lawsuits moving through the courts now virtually ensure that Texas will have to revamp the way it pays for public schools in the coming year.
Those measures for Top State for Business are tradeoffs. Spending more on education, even in the present finance system, would mean higher taxes — whether at the local level or in the business margins tax.
Education can and should be improved, but not simply by increasing funding.
“Texas could bolster its educational quality by promoting competition in K-12 education through reforms such as home-rule school districts and greater use of innovations such as blended learning; and continuing to pursue transparency, accountability, and affordability in higher education,” DeVore recommends. “Legislators should also heed the below-average rating in 'cost of doing business' and take action to reduce the burden of the business margins tax.”
It's often said that there's only one way to succeed, but many ways to fail. If legislators drop the ball on any of the above-listed issues, the state's “business friendliness” — and thus its economy — will suffer. We can't afford that.
Another thing the Legislature should bear in mind is a looming shortage of skilled workers. Texas Workforce Commission Chairman Tom Pauken has been sounding this alarm for years; he's calling for a “dual track” education system.
And that makes sense. The average age of a master plumber in Texas is 56. We're churning out supposedly “college-ready” students who, even if they get a degree, have trouble finding jobs in their fields upon graduation. But we face a growing shortage for skilled welders, electricians and other tradesmen.
The Legislature will face big challenges in the coming session, but none bigger than keeping Texas business-friendly.