This blog is by Glenn Hamer, president and CEO of the Texas Association of Business, the Texas State Chamber. There is no shortage of bragging rights when it comes to the Texas economy. Despite two years of headwinds produced by the COVID pandemic, Texas was one of the first states to recoup jobs lost. Our recovery was so fast that we set a new record employment high of 13 million. We also set a new record on capital investments.
For the tenth consecutive year, Site Selection Magazine awarded Texas with the coveted Governor’s Cup, which recognizes the state with the most qualified capital investment projects. In 2020, we had roughly 780. In 2021, we had an astounding 1,123. To put that in perspective, Ohio had the second most capital investment projects, 480, meaning no state comes close to Texas.
To keep winning, we have to ask: “How do we retain the title?”
As a chamber of commerce veteran, there are innumerable benefits that come to mind when I think of why a company might want to move to a certain state. In Texas, these reasons rise to the top: light tax structures; reasonable regulatory environment; booming population and the most combined Tier 1 and Tier 2 institutions to fuel a skilled workforce; and zero income tax.
The most exciting, transformative companies – the ones that create the biggest economic multipliers – they look at the state or region with the best economic climate and the best quality of life for their talent base. These companies want states and regions that check all the boxes, that have “all of the above,” not just multiple choice. One of those boxes will always be about tax structure, and that is an area upon which Texas can improve. Whether you’re an individual homeowner or a business owner, you know that property taxes are high in Texas. It is brought up every legislative session. Countless solutions have been offered. To attract capital intensive projects, Texas currently has several mechanisms to support businesses moving to our state, but the policy that has earned us the biggest, job-creating projects is set to expire at the end of the year.
Here are some of the capital investments that policy helped secured for our communities: $30 billion from Texas Instruments in Sherman (north of the Metroplex), $17 billion from Samsung in Taylor (outside Austin) to build the next generation of semiconductor chips; $2 billion from Steel Dynamics in Sinton outside Corpus Christi to improve Texas’ steel manufacturing.
In the coming months, Texas leaders have the opportunity to propose ways to make our large capital incentive proposals more competitive, while protecting taxpayer dollars. The Texas Association of Business convened eight roundtables last fall with economic development professionals from every corner of the state to understand what they were seeing in terms of new industries (automotive, semiconductors, steel, rocket and cybersecurity) looking to expand into Texas. We heard first-hand from those who talk to employers every day of the number of interesting companies looking to return manufacturing to the United States. And we heard loud and clear that we must modernize our large capital-intensive tax policies if we are going to compete with other states.
The business community must band together to come up with a replacement mechanism for the expiring tax policy. Texas can’t settle for second place.