What We Are Hearing in Texas
Contributor's Note: The NCMM is hitting the road this year, traveling coast to coast to visit the states with the most mid-market companies, including California, Florida, Illinois, Ohio, New York, and Texas. This special series summarizes dozens of discussions with chambers, associations, policy makers, and business executives to hear about the opportunities, challenges, and growth prospects for mid-sized firms.
Last fall, Time Magazine featured the the brash headline, "The United States of Texas, Why the Lone Star State is America's Future." In the article, libertarian economist Tyler Cowen examines the state's boom and determines that policies have made it the state to watch. After traveling across the state, we can't help but agree.
In the middle market, more than 80 percent of executives have realized the benefits of tax incentives for capital investment. This has led to a belief in state government policies and enhanced confidence and willingness to invest. This boom has created a migration to Texas from all over the country. As we met with companies and business associations, we noticed this humming energy and excitement due to quick growth.
The state's booming economy comes primarily from the energy industry. The strong revenue increases this industry has seen have spread through the state, and have trickled down in to the middle market.
Due to this strong economy, however, many more people are moving to the Lone Star State and stressing its resources. In particular, water has become less readily available to use for energy cooling. According to StateImpact, a reporting project of NPR member stations, Austin's water use tripled from 1970 to 2010.
Paul Faeth, the director of energy, water, and climate at the Institute for Public Research at the Center for Naval Analyses (CNA), wrote in the Dallas News that he remains optimistic about the state's water and energy situation. He writes that while the state faces short-term water and energy shortage problems, he believes in the power sector's ability to cut its water usage and avoid vulnerability to future droughts. Faeth writes that the state's abundance of renewable energy sources, such as wind and sunlight, help its energy projections.
Infrastructure has also become a topic of debate as population grows. According to the Texas Department of Transportation, over the past 25 years, population has increased 57 percent and Texans' road usage grew 95 percent. In contrast, state road capacity increased by only 8 percent. The Department of Transportation has laid out a restoration plan that relies heavily on regional leadership engagement and lowered cost of transportation projects.
Even with these rising challenges, with the state's commitment to renewable energy and infrastructure expansion, we see the Lone Star State maintaining its spot as a top place to do business. The state government has consistently passed legislation that creates a pro-business environment. Their commitment to growing their state will translate into other legislative measures as well that will ease the strain Texas' resources are currently feeling.
Overall, our Texas trip was a great time to connect with people all over the state. We dashed around from Dallas to Houston to San Antonio to Austin meeting executives, policymakers, and business leaders that all showed an astounding commitment to their state.