A Framework for Long-Term Economic Growth

In recent years Texas has received numerous accolades for our business climate, job growth, and economic development success, including:

  • “Best State for Business 2015” by Chief Executive Magazine for the 11th straight year
  • Site Selection Magazine “Governors Cup” award in 2015 that recognizes the state with the most qualifying new and expanded facilities per capita for the 4th year in a row
  • Top exporting state in the nation for the 14th consecutive year, with over $251 billion in goods exported in 2015 (U.S. Bureau of Economic Analysis)
  • At 4.7 percent, a state unemployment rate at or below the national average for 108 consecutive months (Bureau of Labor Statistics, December 2015)
  • Texas is # 1 in private sector jobs added over the last 10 years (BLS, December 2015)
  • CNBC “Top State for Economy and Infrastructure”
  • A “Top State for Fortune 500 HQ” (Fortune Magazine)
  • Best State for Economic Climate and Future Job Growth 2014 (Forbes Magazine)

To continue this level of success and remain the leader in many economic metrics let’s take a long-term view:

— Invest in Texans through skills development and training, including the Tri-Agency Workforce Initiative and programs that support seamlessly working toward an associate or bachelorette degree in high school, like P-TECH;

— Support our entrepreneurs and small businesses, to include a healthy ecosystem of capital to grow and keep our best companies here–high-growth companies require many different forms of capital, at different stages of development;

— Invest in world-class research to spur groundbreaking innovation, including the Governor’s Research Initiative. Maintaining a vibrant and modern economy will be dependent on our ability to create and cultivate innovation-intensive companies;

— Promote quality and completion in public and higher education so that our children are properly equipped with the skills to adapt and compete at the highest levels via, for example, the 60x30TX plan and a balance of debt to earning potential; and

— Provide state and local tools to compete for corporate expansions and re-locations that add jobs to our economy, including the Chapter 313 program and the Texas Enterprise Fund.

Texas’ success in economic development and job creation was no fluke.  Over the last decade plus, lawmakers have created a policy climate built for growth and the entrepreneurial spirit of our entrepreneurs and innovators has, in turn, flourished.  Corporate executives and companies in other states and countries have recognized our business-friendly economic environment and brought their jobs to the state.

The true Texas model is to lead; if we take a long-term view we can keep Texas a beacon state for job creation and a terrific quality of life for our citizens.

I was honored to be recognized recently at the Austin Chamber of Commerce’s Annual Meeting as 2015 Volunteer of the Year for State Advocacy.  The Chamber recognized our “dedication, support and efforts to further economic development and improve access to capital for entrepreneurs and high-growth small businesses.”  http://www.austinchamber.com/monkeewrench/files/news_items/2015_Volunteers_of_the_Year_Chamber_Rele.pdf

We can do better still.   And, I hasten to add, growing Texas and remaining competitive is  a collaborative effort.  We work closely with major Texas business organizations and sectors like the Metro 8 Chambers, Manufacturers, Technology, Bioscience, Education, Economic Development Corporations, and Taxpayer groups to advocate for a strong business climate.

CEO’s tell us that a healthy ecosystem of working capital and a skilled workforce are the two most important factors for sustained success.  Texas remains a very attractive place to do business and raise a family.   Case in point (5 of the Top 10 in Texas):

http://www.creditsesame.com/cities/10-best-big-cities-relocate-in-new-year/?utm_campaign=El_Paso_a_Top_10_City_Worth_Moving_To&utm_medium=Facebook&utm_source=SocialToaster

But let’s not rest on our laurels.  Public policies that stimulate, not restrict, job creation will never go out of style.

I look forward to working with you toward these goals in the months ahead.

Craig

First let me wish everyone a safe, joyful, and prosperous new year.

In case you missed it, 2016 will include several milestones.

To name a few… 2016 is a leap year (yes, there will be a February 29); it’s the Chinese Year of the Monkey – a ‘clever’ animal if you believe the hype  – starting Feb. 8; it’s the 16th year of the 3rd millennium, the 2016th Year of the Common Era, a transit of Mercury will occur (in May); and in March the ESA (Europe) and Roscosmos (Russia) plan to launch the joint ExoMars Trace Gas Orbiter on a mission to Mars, presumably looking for Matt Damon.

Perhaps most significantly, the year 2016 marks the 20th full year in business for Quorum Public Affairs, Inc.

We Know Texas from top to bottom, having spent 30 years in and around the Texas public sector including work for 2 Texas Governors.  When we started, we were ‘first in’ the new world of engaging grassroots citizens and opinion leaders to influence state and federal policy in the state.

Today, Quorum continues to operate at the intersection of business, communications, and government in Texas; we build strategic relationships with public officials, influencers, business leaders and voter groups for companies doing business in Texas.  And 30 years gets you great relationships; our network is second to none.  It’s also true that for the last 20 years we’ve advocated, built coalitions and solved policy and regulatory challenges for companies and issue coalitions large and small, including venerable brands like:

Allstate

AT&T

Advantage Capital Partners

Boeing

Conoco Phillips

Dell

Exxon-Mobil

Fed-Ex

Ford

Grant Thornton

LIN Media

McLane Co.

Nationwide

Pfizer

Shell

State Farm

Smith’s Group

Top Golf

USAA

Wal-Mart

We stay closely connected to the business, economic development, and venture capital sectors via the Texas First Alliance that we manage and Governor Abbott’s Texas One Foundation.

We’re helping companies re-locate or expand in Texas market with financial incentives and facilitating business alliances to aid their growth. In fact, two California-based companies for which we’ve helped develop relationships are on the way in 2016. Oracle, Apple, Chevron, Google, GM Financial, and others made significant investments in major Texas markets. Texas is investing in the companies, too, through the state’s Texas Enterprise Fund and other incentives.  Companies like LIN Media and Top Golf re-located their corporate headquarters to Austin and Dallas respectively.

In 2016, our interim legislative committees will be looking at issues across the board, with emphasis on a tax and regulatory environment that supports Texas’ competitive economic advantage in culture and cost; it’s a growth agenda and Texas continues to be a destination state.

Speaking of numbers, if you’re a numerologist you know that nine is a finishing number, and may represent the beginning or the end of a cycle.   It also is the number of the humanitarian which we’re adding to the ‘to do’ list.

Our plan is begin another 20 years of doing what we do best: helping companies navigate political, legislative, and regulatory challenges, build alliances and carry the right message to the right audience.

Here’s a great old tune to remember us by: https://www.youtube.com/watch?v=4aR2QFwpsnI

Don’t hesitate to reach out anytime if we can be a resource.

All best wishes in the new year and I look forward to staying in touch.

Craig

Craig Casselberry

(512) 762-7366

QPA-Blog-GOP

Sixteen Republicans – a number so big they do it in shifts – will take the debate stage tonight to offer their views on the future of the country and what they’ll do to affect change.

Now what?

I have some advice for the Grand Old Party: go long on the Grand and shelve the Old.

To be more specific: stand for Growth and Opportunity.

Get it — GOP.

Thank you, Sherlock.

Republicans need an identifiable message that resonates with the public.

Call it a freshening of the brand, call it strategic messaging, call it marketing and advertising, but mostly call it overdue.

The private sector does it every day, out of necessity. Otherwise you’re lost in the marketplace. Identifying what you’re selling, your market, the best way to say it, and whom to say it to are part of any successful business plan.

Think about some of the great corporate branding campaigns and what they meant for the long-term success of the company: Intel Inside, Have a Coke and a Smile, Don’t Leave Home Without it (American Express), A Diamond is Forever (DeBeers), Think Different (Apple), Got Milk? And oh yes, Nike has a few.

Brands with an identifiable message resonate with people years later.

And there’s Trump, a brand as big as any at the moment. His brand identity, combined with his willingness to say out loud what many people only think, has him leading the polls. The Trump Effect may force the other candidates to get bolder in their style and their messaging.

That could be good. Maybe necessity really is the mother of invention.

Republicans need fresh, grand ideas and no more status quo.

The Republican front-runner won’t do it. The brand Trump cares about most is Trump. So another Republican should take this mantra and run with it. The country needs you.

Before I lay out the blueprint to save the country (you’re welcome, by the way), let’s cover a few key premises of the Growth and Opportunity branding campaign.

The Fundamentals

Opportunity is really about freedom, the cornerstone of the American Way­—the freedom to try, the freedom to buy, the freedom to sell, the freedom to fail.

Opportunity and freedom are made possible by the principles on which our country was founded: individual liberty, sovereignty of the people, federalism, state’s rights, limited government represented by our democracy (as messy as it is in practice), and private property.

Isn’t opportunity — as a counter to tyranny — what the revolutionaries fought for, and what (presumably most) Republican elected officials campaigned on? Isn’t that what we wanted and a key tenet on which the country was founded?

Give the American people a history class. It will work.

The highest level of prosperity occurs when there is a free-market economy and a minimum of government regulations. We are the world’s greatest innovators.   Of the most valuable private companies in the worlds, 9 of the top 10 are American (through Q3 2014; Financial Times Global 500). Of the world’s most valuable brands, the Top 7 are American. Our gross national product is #1, according to the United Nations, and it’s not even close, almost double that of #2-ranking China, which is nice.

Capitalism creates the wealth that allows us the creature comforts we enjoy, to take care of those who can’t do it for themselves, and allows the U.S. to support most of the free world in some fashion. We the people get to choose within the marketplace and reign in the rogues as needed (see Wall Street, circa 2008).

America is not perfect and we should take care of those who really need help. We’re # 10 in the so-called “Prosperity Index” that measures the success of countries based on 89 different economic analysis variables in industry, education, health, freedom, opportunity, and social capital (Business Insider).

Anyway, let’s say we can agree that growth is good since jobs and output drive the economy in a positive direction and it’s worked out well for America so far. Underscoring these basic values will be fundamental to an inspiring campaign.

Republican ideals need to be wrapped in a full-scale branding campaign, so stay with me for a minute on the big message—Growth and Opportunity – and underlying principles that accompany them.

In the end, it’s a winning formula. Who cares about growth and opportunity? How about immigrants, particularly the most important demographic in politics today, Hispanics.

What It Means

When you boil it down, what does Growth and Opportunity really mean? I say keep it simple:

  • Individual freedom and jobs. Everyone should have the chance to get a job or start a business. If you’re willing to work, this is inherent in our capitalist society. But what tools do we need?
  • Education. Everyone should have the chance to get a post-secondary education. That’s a traditional University, community college, vocational school, or the like. And everyone should be encouraged to go. In fact, the government should pay for it if, for example, that person will do a minimum of 1 year of service, whether it be military or philanthropic (the Israel model).

We do it for secondary education, but that’s not good enough today. Remember this constitutional principle: a free society cannot survive as a republic without a broad program of general education. This was a worthy goal in 1776 and needs to go farther today as we operate in a global economy.

The income chasm is growing between the rich and poor. According to U.S. News“Americans are feeling increasingly in economic retreat. Barely half (51 percent) now consider themselves as being part of the middle or upper classes, compared to an average of 61 percent during 2000-08. A full 48 percent say they are now in the working or lower classes.” We need to figure out why and how to fix it. Not to make it equal – it will never be equal, we’re not a socialist country. We need to pay attention to the underlying causes and it probably comes back to education.

  • People first. The constitutional principle of popular sovereignty says that the authority of the government is created and sustained by the consent of its people, the source of all political power. We are a republic; our elected officials represent us. If they forget that, we shouldn’t forget our freedom to remind them at the ballot box on Election Day.

We also need every citizen vested in the federal budget to have a stake in our goals as a country. Our current revenue model is unsustainable and trending the wrong way; we can’t have half of the country pulling the wagon and the other half riding… the wagon won’t move.

And yes, we should account for enlightened evolution. Beliefs held by a society in 1776 can and should change over the course of 238 years, but the basic principles on which the country was founded should remain constant. This is not Europe and I refuse to believe that most Americans want it to be.

Chasing the Dream

Isn’t the American Dream why we’re all here or want to be? Isn’t that why we were founded? We get to pursue happiness, for goodness sakes, and even have the right to choose it—it’s aspirational.

Opportunity is tried and true, it draws people; it conjures the imagination and inspires big dreams, it’s why people come here and don’t leave.

So, I’m proposing a GOP refresh. Engage the public and make it happen.

Call the campaign American Revolution 2, hire Vin Diesel, throw in Mom, Apple Pie and the Flag for all I care. It’s not King George, but other countries are nipping at our heels economically (see Middle East oil squeeze), and educationally (we’re being substantially out-performed by the BRIC countries and others in the STEM subjects).

We better get deadly serious about the terrorist threat to our national security and the borders or none of it will matter.

Repeat after me GOP — Growth and Opportunity.

Just Do It.

QUO_Relocate

Here in the Friendship State we are always welcoming new business. Our prolific business climate makes for the perfect atmosphere for growth and profitability of a company. I can name a hundred reasons for a business to relocate to Texas—Austin Business Journal asked for my top seven. Here’s a sneak peek at what I had to say:

It’s a bit cliché but true—Texas is business-friendly. But there’s more: Jobs, parks, arts, education and affordable real estate make us family-friendly too. And for businesses, the rewards run deep.
Continue reading the 7 reasons businesses should move to Texas at the Austin Business Journal→

The 84th Texas Legislature has come and gone and they didn’t stray far from the playbook that has led to the nation’s strongest state economy.

The good news is that lawmakers took steps to cut business and property taxes, hold down spending, and improve infrastructure, if you’re into that sort of thing.

In contrast to some states, Texas’ is a public policy climate built for growth and apparently entrepreneurs are noticing. The Kauffman Institute just named Austin the best city for start-ups, and 4 Texas cities made the Top 15.

http://www.mystatesman.com/news/business/austin-has-countrys-fastest-rate-of-startup-activi/nmT74/?icmp=statesman_internallink_invitationbox_apr2013_statesmanstubtomystatesmanpremium#261a2418.3595084.735753

The House and Senate came to agreement on tax cuts totaling $3.8B that includes cutting the state business tax (aka Franchise or Margins tax) by 25% and increases the state homestead exemption on school property taxes from $ 15,000 to $25,000, an average savings of $ 120/year.

Fiscal hawks will like the budget. It’s balanced, the $ 209.4B total increases by just 2% per year, stays $3B under the state’s spending cap and leaves $11B in the state “rainy day” fund.

If Texas voters approve in November, $2.5(B) in state sales tax revenue will be directed to highways beginning in 2017 as long as total sales tax revenue exceeds $ 28B, and 35% of any vehicle sales tax revenue above $ 5B beginning in 2019. They also ended diversion of money from the State Highway Fund, which will add another $ 1.3B for construction.

The state’s Department of Transportation says they need $5B a year to keep up with population growth; the 84th Legislature at least got the ball rolling.

Higher education received $ 3.1B in bonds for renovation and construction projects at 64 campuses, the first round of such funding since 2006, and Governor Abbott won approval of $40(M) for the Governor’s University Research Initiative to award matching grants to Nobel laureates and National Academy members as we work toward more Tier 1 Universities and get our institutions of higher education more involved in economic development.

The Texas Enterprise Fund that provides cash to companies re-locating to the state received $ 90M, less than the $200M the business community requested.

Additionally, the Emerging Technology Fund which has funded numerous early-stage companies fell victim to politics and accusations of ‘crony capitalism’ and is being phased out.

A state contracting reform bill by Sen. Jane Nelson will shine more light on public sector contracts and, it appears, promote more competition among the private sector to provide products and services to state government agencies.

On the short side, school choice failed to pass the House and public education wasn’t funded to a level it needs to be, in the opinion of some.

All told, while many business leaders were disappointed with the cautious approach to economic development, Texas can point to a broader policy climate that remains very attractive to companies of all sizes.

As the Texas House and Senate recently rolled out dueling tax cut plans, reports indicate a slowing of the Texas economy in the 1st quarter of 2015.

The Senate, led by Lt. Gov. Dan Patrick, wants significant property tax reductions. Patrick campaigned on a promise of property tax cuts.

The House favors a cut to the sales tax. Sales taxes – which range from 6.25% – 8.25% – are the 2nd largest revenue source in the state, a total of $ 27B, or 26% of all state revenue in fiscal year 2014. The thinking goes that sales tax cuts would put more discretionary income in the hands of consumers and stimulate additional spending to boost the economy.

Property taxes accrue to local governments and municipalities. These cuts are targeted at the homeowner.

Can either plan jumpstart a sagging economy? The Dallas Federal Reserve said the Texas economy slowed by 3.8% in Q1, mainly due to falling oil prices, a strong dollar, and a slowing U.S. economy. http://www.dallasfed.org/research/update/reg/2015/1503.cfm

While the Texas economy has diversified in the last 20 years, energy is still king. Oil and natural gas production taxes totaled $ 5.77B in FY 2014, or 5.5% of the total budget. It’s safe to assume that revenue will decline in 2015. How will the difference be made up? There’s been no serious debate about cutting oil and gas taxes.

It’s interesting to note the juxtaposition of Texas’ philosophy vs. other states; Texas policymakers take a supply side approach – as the economy slows, tax revenues may logically fall, but rather than raise tax rates to increase revenue, we cut taxes to stimulate spending and therefore increase revenue.

The Texas economy and state budget will be an interesting case study to watch over the next 24 months.

Speaking of taxes, there are ways the State of Texas can stimulate economic growth that will not only parallel the supply side approach but also be good politics for the state’s Republican leadership.

The New Markets Tax Credit program started as a federal program in 2000 and has been renewed by Congress every year since. Since then, 12 states have passed a state program to leverage the federal money and attract investment in small businesses and other entities, particularly in rural and distressed areas of the state. Texas ranks 43rd in Federal New Market Tax Credit investments, in part because we lack a state New Markets Tax Credit initiative to attract outside capital. Investors are deploying capital in states with initiatives to match those at the federal level. As a result, Texas is missing out on growth investments, especially in rural and other distressed areas.

As the theory goes, small business owners are more likely to be conservative thinkers, favor limited government, etc. If Republicans don’t turn growing constituencies like Hispanics into entrepreneurs they are likely to find themselves in the minority in the next decade or so.

A recent report by Dr. Simon Mak of the SMU Cox School of Business examined Texas deals funded by the Federal New Markets Tax Credit program. The report concluded that the total potential economic activity driven by a Texas New Markets Tax Credit program what would almost twice (1.76) any foregone tax revenue, create approximately 5,000 jobs and attract additional private capital to Texas at a rate of $4-to-1, driving further job growth. Dr. Mak’s study notes that the return on investment (ROI) multiplier is even greater in rural Texas.

The New Markets program is, in essence, a public-private partnership that gets capital to areas of the state that otherwise may not have access to it; the program offers the best of both worlds- preserving the independence of private investment decisions in Texas, while smartly deploying available government incentives.

The program can also serve to create and keep jobs in Texas, rather than having companies funded by outside interests and moved elsewhere.

From a policy perspective, cutting taxes is a strong symbolic move to continue attracting corporate re-locations and the job growth that comes with it. To stay competitive with other states over the long-term, Texas should also consider innovative programs like New Markets to spur economic development.

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