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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

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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

 

 

 

House Bill 108 recently passed by the 85th Texas Legislature and signed by Governor Abbott on June 1 authorizes the Texas Workforce Commission (TWC) to use the state’s Skills Development Fund to provide support services for employers expanding in or relocating their operations to Texas, effective September 1, 2017.

The money can be used for expansion in Texas or re-location from another state to Texas for employers offering complex or high-skilled employment opportunities.

It’s estimated the Fund has about $ 48,000,000M available.

The Fund will provide leadership and direction to out-of-state employers, economic development organizations, local workforce development boards, public junior colleges, and public technical institutes to address the employers’ needs for recruitment and hiring for complex or high-skilled employment positions to facilitate employers’ relocation to or expansion of operations in Texas.

The funds can also be used to award grants to a public junior college or public technical institute providing workforce training and related support services to employers who commit to establishing a place of business in Texas.

The executive director of the TWC is responsible for the distribution of grant money.

The TWC can solicit and accept gifts, grants, and donations from any public or private source for the purposes of the bill’s provisions.

The TWC can require that a recipient repay the amount received and any related interest if TWC determines that the money was not used for the purposes for which the money was awarded.

http://www.twc.state.tx.us/partners/skills-development-fund

 

 

 

The 85th Legislature adjourned after passing a $ 217 B budget to fund state government for the next 2 years.

While a lot of attention was given to the A-F rating system for public schools, the session ended with about a C grade for Texas business.

Important incentive programs to allow Texas to remain competitive came under fire.

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, far short of the $ 200 Million the business community wanted.

The Film Incentive program received $ 22M, nowhere near the $ 72M Governor Abbott requested.

In both cases, the House and Senate included virtually no new money for these programs but the Governor stepped in to salvage some funding.

On the issue of infrastructure, we did not take pass a bill to extend local government authority to create public-private partnerships, which some see as a means to get roads, bridges, pipelines and other infrastructure built more quickly.

https://texasbusinessradio.com/blog/legislative-update-5/

Some positive news..

The Texas Economic Development Act, or Chapter 313,  that allows local governments to abate property taxes to attract jobs to their communities DID survive opposition from some lawmakers.

The fast-growing biotechnology industry passed some important innovation and patient protection measures and helped continue the Texas Cancer Institute for at least 2 more years.

The Texas Workforce Commission (TWC) was authorized to use the Skills Development Fund to help employers expanding or relocating their operations to Texas if they’re offering high-skilled jobs.

In K-12 education.. several bills will promote more intensive computer science training for our students in specialized fields like cybersecurity.

P-Tech, an innovative program that partners K-12, higher education and the business community (companies like Dell are partnering with Austin schools, e.g.) has been approved and signed by Governor Abbott.

A Telemedicine billed passed that will give Texas patients more options for care and should attract medical technology companies to the state.

Oh, and the Legislature created a statewide regulatory framework for ride-sharing companies.  Yes Austin – Uber and Lyft are back.

And finally, for more summer fun, Governor Abbott just called the Legislature into special session starting July 18.   They will work on property tax relief for homeowners, among a possible 20 total issues.

In the dramatic conclusion to the 85th session, lawmakers almost came to blows on the floor of the House over the issue of immigration.  When they return, the Texas business community hopes the fight will be to keep Texas the best place in America for business.

With the 85th Texas Legislative Session winding down, there are lots of bills dead or dying.

Most of the action during the last 2 weeks will revolve around the state budget.

The Senate and the House have named 5 of their members as ‘conferees’ to work out differences.

They started about $ 2 billion apart.

A big part of the difference is whether to use the state’s so-called “Rainy Day” fund (the current balance is about $ 11 B) to fund state government in 2018 – 2019.  The House says yes, the Senate says no.

Keep in mind – about 1/3  of the budget goes to Medicaid, the health insurer of last resort.  And another 1/4 of the budget funds public education.

On the subject of health care costs, there is some good news.  The Legislature has passed a bill to allow telemedicine, which is direct-to- consumer healthcare starting on June 1.  Texas was one of only 2 states that didn’t allow it.   That bill is on its way to Gov. Abbott.

And, there are several digital education bills supported by the Texas technology industry to modernize how we train our kids.  They would allow our students access to the technology they use outside the classroom.   These bills are still pending but championed by Sen. Larry Taylor and supported by Lt. Gov. Dan Patrick so the outlook is good.

If the budget isn’t settled by May 29, Governor Greg Abbott will have to keep them in special session.  Those sessions run for 30 days at a time and the Governor solely controls that agenda.

There’s also speculation that the Governor could call them back if they don’t settle on a long-term solution to fund public schools; the current system is commonly referred to as “Robin Hood” and seems to work for just about nobody.

It’s been an interesting and some would say dramatic session, particularly in the Texas House.  As an example, University of Texas Exes are rallying to stop a bill that would take several hundred acres of land donated by a prominent alumnus, Col. George Brackenridge, in the 1900’s and give it to the Texas Parks and Wildlife Department.  UT calls it a land grab that could put a chill on future donations.   It would be interesting to see how Gov. Abbott, a Longhorn, would view that bill if it reaches his desk.

So, if you’re looking for free entertainment these next 2 weeks, stop by the Texas State Capitol.   It will not be dull.

Catch us also on Texas Business Radio: https://texasbusinessradio.com/