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In the last 2 weeks Chief Executive Magazine named Texas the best place for business in the U.S. for the 9th year in a row, and Site Selection named Texas the #1 most economically competitive state.

As part of Chief Executive’s report, CEO’s are surveyed on economic indicators like regulations, tax policies, workforce quality, educational resources, quality of living and infrastructure.

The recognition doesn’t happen by chance. I like to say that Texas’ success boils down to 2 broad areas: culture and cost.

Texans are free-thinking, risk-taking entrepreneurs by nature. And we welcome those who want to come to the state to do business, work hard, raise a family, and pursue the American Dream; we’ll wave and say hello (don’t laugh, you’d be amazed at how many transplants I talk to who found it disconcerting at first but now appreciate it as part of our culture)

Texas also has a public policy climate built for growth that has played a major role in Texas’ economic success over the past 10 years. And with a budget surplus driven largely by prudent fiscal policy decisions in the lean years and abundant natural resources, now is the time for investment in infrastructure.

The 83rd Texas Legislature has 1 more week before its scheduled May 27 adjournment to make sure the state is positioned for continued success over the next decade and beyond.

Most pressing are water, roads, and education. A surging population – as many as 1,000 new citizens per day – means that infrastructure is strained. The Texas population has more than doubled since 1970 and is projected to double again in the next 40 years. From 2011-2012, Midland was the nation’s fastest growing metropolitan area under 1 million people, according to the U.S. Census Bureau, and Austin was the fastest-growing city of 1 million plus; Houston, Dallas, and San Antonio also made the Top 10.

Today, Texas is the destination state. The ability to get water, freight and people where it and they need to go will be critical to attracting the kind of companies, jobs, and families to keep it that way.

Water is particularly critical since it and energy – a primary driver of Texas’ economic success — are so directly tied. But so too is energy tied to roads. In fact by some estimates Texas needs almost $2 billion dollars just to fix the heavy use roads between the major natural gas fields largely centered in southwest, west, and north Texas. It’s costly not to do so — Ohio’s energy sector is being hamstrung by its lack of infrastructure investment:

http://www.bizjournals.com/columbus/blog/2013/05/lack-of-infrastructure-limiting-utica.html?ana=e_hstn_nrg&u=NeDavdyVSkMT8Kc37u53IQ078114c5&t=1369063181

As legislators consider these issues in Texas, it will be interesting to see to what degree they allow the private sector to participate in the development of, for example, water reservoirs, pipelines and rail for transport. Like toll roads – where a private developer capitalizes the project and the recovers their investment through tolls, with the state receiving a percentage – it may make sense to allow private companies to use private risk capital to get these projects on line more quickly, and recover their investment later.

The backdrop, of course, are the politics of priorities and price tags. Democrats want education considered and funded on an equal level to water and roads, and Republicans don’t want to increase things like motor vehicle registration fees or use the Rainy Day Fund to speed up development.

And about education.. When you ask entrepreneurs what they need most they’ll tell you: 1) capital, and 2) a skilled workforce. Today, our technology sector still looks to California to fill some technical jobs. The Legislature is pushing toward excellence in public and higher education – and committing additional money — but this issue is so critical that it deserves its own post-session analysis. One interesting development is the creation of a ‘super University’ in south Texas aimed at the rapidly growing Hispanic demographic and programs led by the Governor’s Office and Texas Workforce Commission that will tie graduates to jobs in positions of need, particularly high growth sectors.

One of the foremost venture investors in the country told me recently that an outstanding system of higher education attracts the brightest minds, who spin our groundbreaking technologies, which attracts private capital, which allows companies to create jobs and grow in Texas.

These are all components of a vibrant business ‘ecosystem’ that will drive economic growth in the years to come, keep cost of living low for families, and help Texas remain a destination for entrepreneurs.

The Legislature has a difficult job – priorities differ across constituencies – so let’s hope they can sort through it all and make sound decisions in the waning days.

Craig Casselberry
512-762-7366
http://www.quorumpublicaffairs.com

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