ABB 2006/7 | State Profiles | South West region | Texas | Profile

Texas continues to garner international attention because of the state’s favourable tax climate, tort reform, business-friendly attitude and low cost of doing business. The many global companies that call Texas home greatly enrich its multi-faceted, wide open for business landscape.

Last year, London-based Foreign Direct Investment magazine named Texas as its biannual 2005/2006 “US State of the Future”, while closer to home Site Selection magazine crowned the state as its Governor’s Cup winner for the second consecutive year.

Texas’ pro-business attitude is as big as the state itself. About 56 of Fortune 500 companies call Texas home, more than any other state in the US. According to the US Department of Commerce’s latest foreign direct investment report, UK-based companies contribute more than $17.4bn annually in foreign direct investment into the Texas economy and employ about 91,300 workers.

America’s best place to do busines

Texas has a business climate that is second to none. A biannual survey of leading American corporations and executives conducted by Development Counsellors International cited Texas as being the “Best State for Business”. Texas has garnered the honour for three consecutive survey terms.

If Texas were its own nation it would represent the world’s 10th largest economy, and for the fourth consecutive year, Texas is the top exporting state in the nation with 2005 exports valued at $128.7bn. Businesses flock to Texas because of several business advantages including having one of the lowest tax burdens in the country, ranking 49th nationally by total tax per capita in 2005. The state also does not have a personal income tax, and its constitution requires a vote of the people in order to pass one.

Texas is the only state with its own power grid. The state boasts one of the most robust, well-functioning electric markets in the world, and there is a projected 25% electric energy reserve margin through 2009. The state’s innovative, deal-closing fund – the Texas Enterprise Fund (TEF) – continues to be a drawing card for businesses. To date, more than $308m has been awarded through the Fund. Early projections estimate that the TEF grants will result in more than $9.3bn in capital investments in the state and will create more than 42,000 jobs.

The Texas Legislature established the TEF to provide financial resources to help strengthen the state’s economy. Capital investment, job creation, wages generated, financial strength of the applicant, applicant’s business history, analysis of relevant business sectors, and a project’s federal and local government and private sector financial support are all factors influencing approval.

Another tool in Texas’ impressive economic development arsenal is the Texas Emerging Technology Fund (ETF), which is designed to help Texas create jobs and grow the economy over the long term. The ETF expedites the development and commercialisation of new technologies, attracting and creating jobs. It focuses on three main investment areas: increasing research collaboration through Regional Centres of Innovation and Commercialisation located throughout the state; matching research grants funds; and attracting more top-notch research talent. As of August 2006, more than $17m has been awarded to emerging technology companies.

A high-powered workforce

Texas has the second largest civilian workforce in the US with 10.9 million workers. In the past 10 years, the state has added more than 1.7 million new jobs. Texas is a national leader in setting education and accountability standards, high school graduation standards and other innovative education efforts. Higher education continues to be impressive. It boasts the nation’s third largest pool of graduate scientists and the second largest pool of graduate engineers. The state has an estimated 1.19 million students enrolled in institutions of higher learning, and has awarded more than 146,000 degrees annually, according to estimates.

During the 2006 special legislative session, Gov. Rick Perry successfully led the Texas Legislature in passing a comprehensive school finance reform package that provides a record 33% reduction in school property tax rates and overhauls the state’s archaic business tax structure. Overall, the package provides a net tax reduction of $7bn over three years to business and residential property owners. The package of bills drew broad support from the state’s business community.

The school finance package also includes taxpayer protections against ever-increasing property tax hikes, establishes the largest incentive pay programme for teachers in the country, and implements significant school reforms to improve the education of Texans. Gov Perry also signed legislation to extend the Texas Economic Development Act to the year 2011 and expanded the list of qualifying facilities. It allows public entities to create tax and incentives at local level to encourage corporate expansion and recruitment.

Reliable transportation routes

Texas supports a state-of-the-art transportation and telecommunications network that facilitates the movement of people, goods and information. With 27 commercial airports in 24 major cities, the economic impact of the state’s general aviation sector is estimated at $5.9bn. The state’s Trans Texas Corridor – using public-private partnerships to accelerate development – will further enhance mobility around the state.

A few Texas transportation assets include:

• Fort Worth Alliance Airport is the first purely industrial airport in the Western Hemisphere.
• Forty five railroads operate on 10,246 miles of track to carry more than 363 million tons of freight each year.
• More than 301,000 miles of public roads – more than any other state.
• Thirteen deep-water ports with channels at least 30 feet deep, and 29 seaports line the Gulf Coast.
• The Port of Houston is ranked first in the nation in foreign waterborne commerce.

Abundant resources

With more than 267,000 square miles of land, Texas is a state with abundant natural resources and energy. Texas is the largest oil and gas producing state in the nation, with more than 356,000 oil, gas, and injection wells. The state is also the nation’s largest wind power production market with more than 2,370 megawatts of wind energy power.

The location of the state reinforces the tremendous market potential. Texas shares a 1,254 mile border with Mexico. The state’s central location provides timely access to national and international markets by air, rail, road and water. Texas is a gateway to trade with Latin America, representing an estimated 70% of America’s commerce with Mexico travelling through the state.

Diverse economic base

In 2004, Texas introduced a comprehensive job creation effort to encourage growth opportunities for six key industries. The State of Texas presents unique advantages in these fields:

• Advanced Technologies and Manufacturing
• Energy
• Aerospace and Defence
• Biotechnology and Life Sciences
• Information and Computer Technology
• Petroleum Refining and Chemical Products.

Texas ranks third in the nation in venture capital investments and boasts more than 1.7 million small businesses. High-tech companies such as Texas Instruments, EDS and Dell call Texas their home. San Antonio’s Southwest Research Institute is the world’s third-largest independent, nonprofit applied research and development centre.

The medical and biomedical industries are also strong. The Texas Medical Center in Houston is the world’s largest medical complex and headquarters more the 40 health care organisations. Texas is home to 2,857 medical research, development and testing laboratories and 137 pharmaceutical companies. The state is nationally ranked in the top 10 for biotechnology-related venture capital funding and for the number of traditional biotechnology companies.

Texas ranked third in the US for aerospace employment in 2004. The Johnson Space Center was established in 1961 as the Manned Spacecraft Center and serves as the lead NASA centre for the International Space Station, a collaborative effort of 16 nations and the largest, most powerful complex human facility to ever operate in space.

Quality of life

Texas’ beaches, rugged mountains, endless prairies, and piney woods provide a spectacular diversity of geography and wildlife. The same diversity extends to the people who call Texas home, creating a rich cultural heritage that makes Texas great.

For more information, contact:
Aaron Demerson, Executive Director, Economic
Development and Tourism Division
PO Box 12428
Austin, TX 78711
Tel: 001 512 936 0100
E-mail: ademerson@governor.state.tx.us
Website: www.texaswideopenforbusiness.com

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