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First, let me wish everyone a safe, joyful, and prosperous new year. In case you missed it, this new year of 2018 is noteworthy on several levels.

To name a few… 2018 is a Universal Year of “11”; it’s the Chinese Year of the Dog  (our two Labs, Sundance and Bear, were nonplussed at the news) starting Feb. 16; 2018 (MMXVIII) is a common year starting on Monday of the Gregorian calendar; and the 2018th year of the Common Era (CE) and Anno Domini (AD) designations, the 18th year of the 3rd millennium,

This is interesting.. Donald Trump, George W. Bush, and Bill Clinton were all born in a Dog year (1946). This is less interesting but may be useful at a dinner party – the Dog occupies the eleventh position in the Chinese zodiac, after the Rooster, and before the Pig.

2018 is designated as the third International Year of the Reef by the International Coral Reef Initiative, which may (or may not) have been inspired by Jimmy Buffett. https://www.youtube.com/watch?v=1o9A8YYkxjw

The 2018 Winter Olympics will be held in South Korea February 9-25 – and broadcast by our good friends at KXAN Austin (NBC) — and on July 27, Mars will make its closest approach to Earth since 2003 and presumably we can finally find the Russian monkey (and hopefully is the same size we left him).

Most significantly of all, February of 2018 marks the 23rd full year in business for Quorum Public Affairs.

“We Know Texas” from top to bottom, having spent 30 years in and around the public sector including work for two 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 Texas.

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 since 1994 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, CBRE, Conoco Phillips, Dell, Ergo Genesis, Exxon-Mobil, Fed-Ex, Ford, Grant Thornton, LIN Media, Nationwide, Pfizer, Shell, State Farm, Smith’s Group, Top Golf, USAA, and Wal-Mart.

In 2017, we added new accounts like the National Governor’s Association; Corvel; Synexis; Cypress Equities; Battelle; Custom Technology Solutions; Fortium Partners; RSM; Energy Innnovation Partners; Viimed, CBRE, and others.

We stay closely connected to the business, economic development, and venture capital sectors via the Texas 2050 Coalition that we helped form and Governor Greg Abbott’s Texas Economic Development Corporation.

We remain a first call for companies re-locate or expand in Texas market with financial incentives and facilitating business alliances to aid their growth. Texas is investing in the companies, too, through the state’s Texas Enterprise Fund and other incentives.

In 2018, 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.

Dell, Inc. is sponsoring our bi-monthly radio commentary on Texas public policy here: https://texasbusinessradio.com/

And my blog post commentary is here: https://quorumadvisor.wordpress.com/

If you’re a numerologist you know that the “11” represented by 2018 is a Master number and will bring a spotlight to the realms of love, diplomacy, leadership and individuality. It’s also a number representing “inspiration, illumination and enlightenment,” all of which we’re adding to our resolutions list.

Another resolution is to keep doing what we do best: helping companies and coalitions navigate political, legislative, and regulatory challenges, build alliances and direct the right message to the right audience.

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 Casselberry

(512) 762-7366

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The Texas Select Committee on Economic Competitiveness wrapped up their work last week after hearing testimony from over 30 witnesses about how to drive Texas job growth in the years and decades ahead.

The Alamo was the battleground for Texas independence.  During that battle, Col. William Travis famously hung a sign on a cannon that challenged the Mexican army to: “Come and Take It”

OK so they won that battle but the Texians endured to win the war.

Texas has led the country in job creation for much of the last 2 decades and judging by the testimony, Texas leaders are not ready cede that leadership role.

Witnesses included top Texas business leaders from industries like oil and gas, utilities, transportation, technology, higher education, as well as our elected leadership and state officials.

The overriding sentiment: with global economic leadership at stake, education and workforce development are more critical than ever.

The Texas 2050 Coalition of major business groups and Chambers of Commerce has been working closely with the Committee and offered the following recommendations:

1) Align public education with the workforce needs of Texas employers.

  • Provide students with multiple pathways to participate in a modern and evolving Texas economy and ensure that Texas students have pathways to high-growth STEM areas, graduate careers and college- readiness programs.
  • Address the shortage of qualified computer science, science, and math teachers leveraging model programs such as U-Teach.
  • Develop a sustainable pipeline of talent and expand access to computer science and computational thinking skills development in K -12.

2) Maintain a Rational Tax System

  • Texas’ lack of a personal income tax—one of only seven states without one—is a positive for entrepreneurial investment, small business, and corporate headquarters;
  • However, our heavy reliance on property and sales taxes in particular penalizes capital-intensive investment making Texas a higher tax cost state than our competitors;
  • Incentive programs—in particular, property tax abatements and the Enterprise Fund—are important to attract major job projects.

3) Maintain and Enhance Strategic Infrastructure

  • To remain competitive, Texas needs to increase and improve our infrastructure capacity – roads, energy, water, and broadband – to pave the way for smart cities and a growing population. The Legislature should champion policies that:
  • Support public-private partnerships to add infrastructure capacity more quickly.
  • Encourage state and regional investment in key infrastructure for the 21st Century, facilitating access to talent, technology, capital and know-how.

The Committee is expected to issue their report in early January.

Texas’ success in economic development and job creation did not happen by accident.

For the last two decades, Texas lawmakers have created a policy and regulatory climate built for competition and growth.  In turn, the entrepreneurial spirit of our innovators has flourished.

Texas should embrace regulatory policy that protects consumers and the environment without placing unnecessary strain on economic activity; stability and certainty are important for job growth.

Now is not the time to retrench when it comes to economic growth.

As the Committee heard from citizens across the state .. if Texas can strike a balance between business and policy that encourages innovation and fosters respect, we will to continue to lead the country in job creation and quality of life.

 

 

The fight is on in Texas and across the country for what the ubiquitous corporate giant Amazon is calling HQ2 — its 2nd corporate headquarters in the U.S.

And the purse will be enormous: about $5 billion in capital investment and 50,000 jobs with a six-figure average salary.  Add to that the potential to ‘cluster’ related technology jobs and it’s easy to see the reason for the frenzy.

Austin, Greater Dallas, El Paso, Frisco and Houston have submitted proposals;  Amazon is expected to make a decision in the 1st Q of 2018.

So.. what are the prospects for Texas in this competition for an economic whale?

Some are touting the Texas connections of founder Jeff Bezos. He spent his childhood in Houston while his dad worked for Exxon and his cousin is George Strait, who you may have heard sing some country and western tunes.

And..  Amazon already has about 20,000 employees in Texas who, we trust, can attest to the wonderfulness of the Lone Star State.

But in fact it’s mostly a business decision.

Attributes like workforce size and skill, location, and essential infrastructure will decide it, along with the tax and regulatory environment, economic development incentives, and workforce training and education.   Quality of life and other cultural and recreational amenities will be considered along with affordable housing, cost of living and the quality of the public schools.

Amazon’s RFP says, “the project requires a compatible cultural and community environment for its long-term success. This includes the presence of a diverse population, excellent institutions of higher education, local government structure and elected officials eager and willing to work with the company..”

This is likely the template for future large corporate expansions and re-locations and Texas generally stacks up well.

As we look ahead.. business and elected leaders are preparing for Texas’ future through emphasis on skills-based education and workforce development, infrastructure capacity (physical and virtual assets), ‘smart cities,’ access to capital for entrepreneurs, and tools (read: incentives) to stay competitive.

Texas will have stiff competition from other cities and sealing the deal will almost certainly include incentives and require a collaborative state-local effort.

In Texas that will include a package that includes the Texas Enterprise Fund (Governor Abbott) and local tax abatement and of course our pro-business, pro-growth policy climate.

The opening bell has rung on the Amazon deal.

How will this battle end?  Starting with a strong team led by Governor Abbott and great professionals throughout the regional and local economic development ecosystem, Texas has done it before and is well-positioned to do it again.

We can only hope Mr. Bezos doesn’t have any exes here.

The Texas Select Committee on Economic Competitiveness is meeting this week in Austin to “develop and present concrete principles on long-term competitiveness and economic development issues.”

The hearing will examine important factors for companies looking to re-locate to Texas or expand and add jobs here.

House Speaker Joe Straus has explained that two recent events were the catalyst for the Committee:  Hurricane Harvey and its billions of dollars in damage to Texas;  And, Amazon’s pursuit of a 2nd U.S. HQ offering value on a level that might negate Harvey’s damage.

Why is this important?  Texas is slipping – slightly – in economic development rankings.  We’ve fallen to #4 in the CNBC “best states for business” rankings, the first time in 11 years we haven’t been #1 or 2.  Granted, a major factor is falling oil and gas prices.. We remain # 1 in the country for workforce and infrastructure.

Many acknowledge our inherent advantages:  our natural resources in the energy space (oil and gas particularly of course , and now even wind and solar) and our people and that intangible –  entrepreneurial spirit.

But we’ve also done a great job of maintaining a pro-growth policy climate that includes reasonable regulations and relatively low taxes.

As the Speaker’s proclamation notes, Texas needs to make sure our approach to economic development over the long-term is appropriate for the private sector’s changing needs and demands in a global economy that is increasingly competitive.

The Committee will be exploring these areas:

  • Education and workforce development to ensure Texans and their employers have access to skilled workers
  • Infrastructure, including transportation, energy, water, utility and broadband to make sure we have the capacity to accommodate economic growth
  • Access to investment capital to help our young companies grow and stay in TX
  • Investments in innovation across the board (and including unnecessary regulations that would impede economic growth)
  • Existing and potential economic tools (read: incentives) to compete for and retain jobs
  • Tools and authority of local governments to attract new jobs
  • Look at examples of successful and unsuccessful attempts to attract companies to TX – what worked and what didn’t

Major Texas business interests are engaged in this effort.  A group called “Texas 2050” is looking closely at how Texas remains the best place for business and families for at least the next 30 years.

Here’s a fun fact: Texas needs to create 7.8 million new jobs by our bicentennial birthday (2036) to keep up with population growth. Wow..

Can we do it?  With a long-term, smart approach, of course.

The Select Committee meets next on Dec. 5 and is expected to issue a report with recommendations on Dec. 12.

Oh, and a shout-out to Dallas Mavericks owner and adopted Texan Mark Cuban who testified today and coined the “Destination for Excellence” phrase.  I am merely borrowing, which I hope he doesn’t mind. As an Arlington native I am, after all, a Mavericks fan.

For more information find me at Quorum Public Affairs or #ccquorum on Twitter.

Craig Casselberry

cc@quorumpublicaffairs.com

Texas Comptroller Glen Hegar announced this week that  Texas experienced its 14th consecutive month of job growth in August. Here are some numbers on the state of the Texas economy:

  • Employment rose by 2.5 percent for the year ending in August, more than double the rate from 2016.
  • Texas’ employment growth ranked first among states in year-over-year net change (+298,600) and fifth in percentage change (2.5 percent).
  • The trade, transportation and utilities category saw the biggest expansion, with 9,100 jobs gained from July to August;
  • Construction (2,600) and manufacturing (2,200) were second and third, respectively.
  • The latter’s 4.2 percent annual job growth rate was its largest year-over-year increase since March 2012.
  • The Federal Reserve Bank of Dallas noted recently that Texas’ second-quarter job growth rate was the state’s fastest since 2014

Of course these numbers don’t fully account for the effects of Hurricane Harvey; I’ve seen loss estimates of anywhere from $70-190B dollars in economic losses.   As much as 31 percent of total U.S. refining capacity  — much of it in Houston  — was either been taken offline or reduced dramatically because of Harvey, according to CNBC.

Railroad Commissioner Ryan Sitton, though, says that while some refineries did shut down or operated at reduced capacity due to flooding, our energy infrastructure is recovering quickly;  most refineries have now come back online and more than 40,000 Texas men and women are headed back to work.

On the state budget front.. unless oil prices rebound dramatically the next fiscal year state budget (2019-2020) is going to look a lot like the current one; that is, very tight. Particularly given the increasing pressure that Medicaid is applying to state spending.

The Texas business community and our elected leaders will need to be engaged on that subject and even get creative when it comes to economic development – whether its creating a vibrant domestic venture industry here in Texas or landing major deals like the 2nd Amazon HQ’s; their decision is expected in 1st Q of 2018.

On the subject of Harvey, Governor Greg Abbott has said the the state won’t tap into the Rainy Day Fund to help with Hurricane Harvey recovery efforts until the next legislative session—if it uses any of the $10 billion at all.  Houston is expected to tap so-called “Tax Increment Reinvestment Zones” to cover costs.

The state has already given $100 million to Houston to help clean up debris.

None of this is slowing down Texas growth in the near term.  In recent months Governor Abbott has announced major projects with companies like Charles Schwab, Pei-Wei, McKesson, Formosa Plastics, and Boeing.

And one federal note with potential impact on Texas ..  Tax reform proposals being considered by Congress could be a tremendous boon to Texas and the U.S. economy.

Companies who have stockpiled cash overseas could bring that money home and pay a one-time ten percent (10%) tax on that money instead of the 35% corporate rate that would otherwise apply.

The repatriated money could be used on share buybacks, dividends, acquisitions, or capital spending.

Companies with a significant Texas presence would be affected – Apple, Caterpillar, Google, and Oracle have significant cash holdings overseas that could be liberated and spent here at home.

And finally.. most new state laws went into effect on September 1.  If you need information, be in touch.

Craig Casselberry

(512) 762-7366

 

The special session of the 85th Texas Legislature ended a day early this week with some accomplishments and some unfinished business.

Governor Greg Abbott had laid out an ambitious agenda of 20 issues he wanted addressed; 10 of the 20 made it through both the House and Senate.

Sunset legislation to keep several state agencies in operation, which was the catalyst for the extra session, did pass and was signed by the Governor over the weekend, a victory for the medical community.

The business community got a win when the so-called ‘Bathroom bill’ never got a hearing in the House.  The issue united large state Chambers of Commerce in Austin, Dallas and Houston; tech industry leaders like Dell, Apple, IBM, Samsung, and even the energy industry and many others fought successfully to keep the issue from the finish line.

Property tax legislation, a priority for the Governor, was not addressed and will surely be a hot topic during the interim.

Speaking of the interim, most new laws passed during the regular session will take effect Sept. 1

One of those involves the fast-growing data center market.  Texas is the #2 state market for data center operations in the U.S. and Dallas is #3 among cities.

There are a number of reasons for that: the large number of Fortune 500 companies based here, inexpensive cost of power, abundant fiber connectivity in several markets, availability of tech talent, and tax incentives.

To further bolster this space, the 85th Legislature just passed HB 4038 (kudos to Rep. Bohac and Sen. Hancock) to allow contract workers to count toward the minimum of 20 employees for tax incentive purposes.  This change should be a job creator – it should attract more data center operators and more capital investment in the space.   Companies like CBRE , the largest data center facilities management practice in the world (and based in Dallas) and many others will be beneficiaries of this change.

And finally, keep an eye out for a new branding campaign called “Go Big in Texas” to promote job creation and business investment.  The program is sponsored by the Texas Economic Development Corporation. (www.gobigintexas.com)

Did you know?  The Texas economy is the 11th largest in the world – yes, in the world — and growing.   Texas has led the nation in job growth for the last decade. The Go Big in Texas campaign is designed to build on that success.

Craig Casselberry

Quorum Public Affairs, (512) 762-7366

 

The sequel to the 85th Texas Legislature – in the form of a Special Session – starts this week in Austin to address unfinished business.

And.. much like the 1st session ended, there will almost certainly be drama.

First, Governor Greg Abbott wants a bill to continue operations of the Texas Medical Board which licenses and regulates our doctors, nurses and other medical professionals.

If and when that gets done, the Governor has outlined 19 other issues he wants addressed.

The most high-profile of those issues is the so-called ‘bathroom bill’ to require people to use the bathroom associated with their birth gender.

The business community is rallying against the bill for economic reasons.

The perceived discriminatory nature of the legislation could result in Texas losing major sporting and other professional events as North Carolina did before they reversed their policy.  State tourism officials have projected the economic impact in the billions of dollars.

The technology industry – which has made major investments in Texas in recent years — thinks they’ll have a harder time recruiting the diverse and skilled workforce they need.

It’s an issue that has gotten much too much attention.

Speaking of a skilled workforce..

The Legislature recently authorized using the Skills Development Fund to help companies expanding in Texas or re-locating from another state if they offer high-skilled jobs.

The Fund has about $ 48,000,000M available.

And remember, the Texas Enterprise Fund – the Governor’s deal-closing fund for major job projects — will have about $90M to spend over the next 2 years.

Just this week the Governor announced a $6M deal with Merck, the pharmaceutical  giant, to develop a technology hub around the Dell Medical School campus in Austin. Merck is expected to create 600 high-wage jobs.

So, while short of the $ 200 Million the business community wanted — Texas hasn’t completely disarmed when it comes to business recruitment.

And finally, Governor Abbott has said that addressing rising property taxes is the “number one issue” of the special session.

The Governor fears that rising valuations are taxing people out of their homes and wants to reign them in.  These big increases can also hamper business expansion, particularly in the capital-intensive industries.

The rub is that property taxes – which are taxed locally – pay for core community services like public schools, roads, emergency services, police and fire protection.

And, naturally, rising populations around the state put a strain on those services.

It’s a difficult issue to be sure with large and powerful competing interests.

Given the political tension in Austin right now, whether the Legislature even gets to that issue – on the list of 20 – is far from clear.

Craig Casselberry

cc@quorumpublicaffairs.com

(512) 762-7366