Posted by: Debby Durkee | May 16, 2011

Best-worst states for business.

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Best-worst states for business.

This is an interesting article from J.P. Donlon over at the website Chief Executive.net. For those interested in where businesses seem to do better, this is a great resource. Full of rankings on taxes, regulations, living conditions and much more, this ranking was done by more than 500 CEOs. Many charts are available, and they’ll explain the ranking criteria.

More than 500 CEOs considered a wide range of criteria, from taxation and regulation to workforce quality and living environment, in our annual ranking of the best states for business. The charts and articles in this special report show how each state fares on the factors most essential for a business-friendly environment—as well as what states are doing to attract and retain companies in the increasingly competitive battle to win site selection.

It’s the seventh time in seven years running that Texas has led the states, and the seventh year California—to no one’s great surprise—ranked as worst state.

But there has been some jockeying within the ranks. The Golden State was closely followed in the hall of shame by New York, Illinois, New Jersey and Michigan, with Illinois elbowing its way past New Jersey this year for the dubious distinction of third worst. Meanwhile, among the best states, Indiana jumped to sixth place from 16th in 2010, giving Hoosiers the third-biggest advance in the rankings in a single year.

Wisconsin and Louisiana posted the two biggest gains since 2010, with the latter, along with Oklahoma, also showing the biggest gains over the last five years. By proactively reshaping its posture toward business taxation and regulation, Louisiana has been quietly stealing pages from the Texas playbook.

By contrast, Illinois has dropped 40 places in five years and is now in a death spiral. Its bond ranking is 49th, ahead of only California

Rounding out the top 10 (2-10) are: North Carolina, Florida, Tennessee, Georgia, Indiana, Virginia, South Carolina, Utah, Nevada.

Bottom 10 (41-50) are: Ohio, West Virginia, Hawaii, Connecticut, Massachusetts, Michigan, New Jersey, Illinois, New York, California.

Business leaders graded the states on a variety of categories grouped under taxation and regulation, workforce quality and living environment. “Do not overtax business,” offered one CEO. “Make sure your tax scheme does not drive business to another state. Have a regulatory environment and regulators that encourage good business—not one that punishes businesses for minor infractions. Good employment laws help too. Let companies decide what benefits and terms will attract and keep the quality of employee they need. Rules that make it hard, if not impossible, to separate from a non-productive employee make companies fearful to hire or locate in a state.”

Not surprisingly, states with punitive tax and regulatory regimes are punished with lower rankings, and this can offset even positive scores on quality of living environment. While state incentives are always welcome, what CEOs often seek are areas with consistent policies and regulations that allow them to plan, as well as intangible factors such as a state’s overall attitude toward business and the work ethic of its population.  Snip –

Some high-tax states can overcome this disadvantage when other conditions are right. San Jose, Calif.-based Cypress Semiconductor acquired an existing wafer-fabrication plant in Bloomington, Minn., and is growing the facility for the third time. “We found a good Midwestern work ethic, great stability and good schools,” CEO T.J. Rodgers said. “It’s an excellent plant comparable in cost to what we can get in China.”

California, once a business friendly state, continues to conduct a war on its own economy. According to the Pacific Research Institute, it has the fourth largest government of all U.S. states, with spending equal to 18.3 percent of GDP. The comparable figure for Texas is 12.1 percent. Survey respondents uniformly say the state’s regulators are hostile. “No one in his right mind would start a new manufacturing concern here,” said one California CEO.

Some states have seen the job-killing rules and regulations handwriting on the wall and have come to their senses. New Jersey and Indiana have had the good fortune to have governors who aren’t afraid to tackle problems in order to get their states back from the brink. Although New Jersey is still in the bottom five, as he tackles the highest pension underfunding in the nation of government employees, there is hope for New Jersey. Indiana’s rise from number 16 to number 6 this year is due to Mitch Daniels reducing the size of his government work force and tackling health care in the state using market forces. It doesn’t hurt Indiana that it resides next door to basket-case Illinois, now ranked 49th. Businesses don’t have far to flee for a safer haven.

There’s much, much more at the link. Click here to see how your state is ranked: http://chiefexecutive.net/best-worst-states-for-business

Here’s a really cool interactive map where you can see who is where. You can click on your state and see why they made it where they are: http://chiefexecutive.net/states2011

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