TO: VACo Finance Steering Committee
FROM: Dean A. Lynch, CAE, Deputy Executive Director
SUBJECT: CNBC rankings – Top States for Business of 2013
Copy: County Administrators, County Liaisons
CNBC has just released its “Top States for Business of 2013.” The Commonwealth dropped from No. 3 to a tie for No. 5. CNBC ranks states in 10 categories ranging from cost of doing business to education. The report cites the Commonwealth’s rank of 38 in the “cost of doing business” category as the biggest factor for dropping to fifth in the rankings.
Cost of Doing Business (450 Points)
Cost is a major consideration when a company chooses a state. We looked at the state and local tax burden in each state, including individual income and property taxes, as well as business taxes and gasoline taxes. Utility costs can add up to a huge expense for business, and they vary widely by state. We also looked at the cost of wages, as well as rental costs for office, commercial and industrial space (rental cost information furnished by CoStar Group).
While this is only one rating analysis, it is estimated this may be an issue in future local business tax discussions. VACo will keep the Finance Steering Committee apprised of updates.
Please read the article below.
The No. 5 Top State for Business 2013 Is…It’s a Tie!
Published: Tuesday, 9 Jul 2013 | 11:38 AM ET
By: Anthony Volastro, CNBC Segment Producer
Traveler1116 | E+ | Getty Images
For the first time in the seven-year history of CNBC’s “America’s Top States for Business,” there’s a tie in the top five, with Utah and Virginia scoring a dead-even 1,542 out of 2,500 points across 10 categories ranging from Cost of Business to Education.
There’s an old saying among college football coaches that finishing in a tie is like “kissing your sister,” and for both Virginia and Utah, the No. 5 spot is a bit of a letdown.
Virginia is a three time winner—2007, 2009 and 2011—but the state’s slip began in 2012. Last year, Virginia finished No. 3. Even after dropping two more spots and now barely holding onto a top five position, things won’t be getting any easier for Virginia, thanks to the Cost of Doing Business category, where it finished 38th among states. At 450 points, the category carries more weight than ever because states are increasingly marketing themselves to businesses based on this factor.
The Old Dominion also had trouble in the Infrastructure and Transportation category for the second year in a row. This category played a significant role in Virginia dropping to third last year and, in fact, was one of the statistics that Gov. Bob McDonnell used to push through a $6 billion transportation bill. In February, McDonnell said, “Just last year CNBC dropped Virginia to third in its well-recognized annual ranking … in large part because of our repeated inability to properly fund transportation. We plummeted from 10th to 33rd in the specific category of Transportation and Infrastructure. That is unacceptable.”
There has been some improvement in infrastructure, according to CNBC senior correspondent Scott Cohn, but it is a bit too early for the state to turn its Infrastructure and Transportation ranking around, and Cost of Doing Business will continue to be a tough hill for Virginia to climb in years to come.
Utah finished in the No. 2 spot last year, making it’s No. 5 finish a bit of a letdown, with a silver lining. It had a strong score in Business Friendliness, which examines a state’s legal and regulatory climate, finishing fourth among all states, and partially thanks to a corporate and individual tax rate of 5 percent, among the lowest in the nation.
It has a low unemployment rate of 4.6 percent—health care is the largest industry in the Beehive State and Intermountain Healthcare, a nonprofit health-care system, the largest employer with some 32,000 workers. Utah’s worst category in 2013 was Education, where it ranked 39th.
Even with its drop in the ranking, Utah has an extremely strong economy and clearly has its fiscal house in order. The state is projecting a $200 million surplus once fiscal year 2013 numbers are all tallied.
—By Anthony Volastro, CNBC Segment Producer.