< Previous26 TEXAS ECONOMIC DEVELOPMENT GUIDE a notable recession is increasingly likely. In fact, there is an argument to be made that a soft landing has already been achieved, and that any future downturn that might occur would be a separate thing. It is within this framework that the Texas economy has been setting a blazing growth pace, although the rate of expansion has been slowing more recently. The national economy is a key aspect of the condition of the state’s business complex, and the fact that a major downturn appears unlikely is a positive factor in future state performance. One source of uncertainty is geopolitical tensions, with the Russia-Ukraine war continuing and the more recent conflict in Israel- Gaza which began with the Hamas invasion. Additional regions are showing increasing stress, including Venezuela-Guyana and Red Sea shipping lanes. A major escalation in any of these situations or others which may emerge would negatively affect the global economy. Struggles in the Chinese economy could also ripple through world markets. Texas is certainly not immune to such global problems, though the fact that some of them could foster increased energy prices could partially offset the downside, as oil and natural gas are key industries and export products. A definitive positive signal is the Lone Star State’s continued population growth. Maintaining a dynamic economy requires a constant flow of talented and skilled workers, and long-term population patterns and the retirement of the baby boom generation have left many areas with inadequate labor forces. The most recent population estimates indicate that Texas is gaining far more residents than any other state. The U.S. population increased by just over 1.6 million people during the 12 months ending in July 2023, and Texas gained almost 473,500 (about 1,300 people per day). By contrast, eight states saw their population fall in 2023 including large states such as California and New York. A recent study indicated that Texas is also attracting far more young “Gen Z” movers who have reached working age ranges than any other state. Both long-time core industries and rapidly emerging sectors are expanding. Energy has been an important part of the Texas economy for more than a century. In addition to vast deposits of oil and natural gas, the state has more recently become a leader in renewable energy (primarily wind and solar) and emerging areas such as hydrogen and carbon capture and sequestration. Texas has recently won the Site Selection Governor’s Cup for the 12th consecutive year, more than doubling the number of relocations, expansions and significant investments achieved by any other state. Texas is also seeing a surge in technology investments as firms engage in “onshoring” to provide more supply chain resiliency. In August 2023, JaRyCo, a developer based in Allen, Texas, broke ground on FarmWorks One. The project is a 102,000-sq.-ft., three-story office building one block from The Farm in Allen, a 135-acre mixed-use project. Rendering courtesy of JaRyCo28 TEXAS ECONOMIC DEVELOPMENT GUIDE Several major projects involving semiconductor facilities are underway, involving tens of billions in capital investments. Moreover, the state is the site of major campuses for a variety of technology companies. Emerging as a hub for chip fabrication and other technology-oriented industries will spur activity in supplier networks, research labs and many supporting industries. Another industry group where Texas is increasing its prominence is biosciences, and several recent initiatives have the potential to greatly enhance the state’s presence in segments ranging from research to pharmaceuticals to related manufacturing. The selection of the state as a site for the new ARPA-H initiative puts an exclamation point on the state’s recent success. The Perryman Group’s latest projections indicate that real gross product is forecast to expand at a 3.31% annual pace, resulting in a gain of more than $346.9 billion over the next five years. Wage and salary Hotel Emma is a popular spot for locals and visitors alike in downtown San Antonio. Photo courtesy of Travel TexasTEXAS ECONOMIC DEVELOPMENT GUIDE 29 employment is projected to grow by more than 1.6 million net new positions, an increase of 2.17% per year through 2028, which is significantly faster than anticipated for the nation as a whole. Growth will likely be broad-based, with most major industry groups contributing to expansion. Clearly, there are a number of challenges and opportunities facing the state economy. On balance, however, the near-term outlook is decidedly positive. Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www. perrymangroup.com), which has served the needs of over 3,000 clients over the past four decades. 30 TEXAS ECONOMIC DEVELOPMENT GUIDE A merica’s most competitive governor has a new challenge in his sights: grabbing a 13th consecutive Governor’s Cup from Site Selection magazine in 2025. On March 1, 2024, Texas Governor Greg Abbott grabbed the prestigious Governor’s Cup trophy on behalf of the Lone Star State, which secured it for a record-setting 12th straight year. Site Selection annually awards the cup to the governor whose state secures more corporate facility investment projects than any other. In the calendar year 2023, Texas accomplished that feat by hauling in an impressive 1,254 such projects — more than double the total of second- place finisher Illinois, which had 552. Texas nearly tripled the output of third-place Ohio, which had 462. And that’s not all. Dallas-Fort Worth and Houston finished second and third, respectively, among all U.S. metro areas with tallies of 452 and 413 facility deals. Austin also placed in the top 10 by securing 96 investment deals. How does Texas maintain this momentum? Governor Abbott shared a few clues with us: “Texas moves at the speed of business,” he said. “By cutting red tape and burdensome regulations, and making strategic, continuing investments in infrastructure, education and workforce development, Texas offers businesses the freedom to grow and Texans the tools to prosper. I am proud to again accept the Governor’s Cup from Site Selection magazine recognizing Texas’ dominance in attracting significant job-creating business investments. I congratulate the exceptional economic development teams at the local, regional and state level who have worked so diligently How Governor Greg Abbott keeps pushing Texas to new levels of achievement. by RON STARNER INTERVIEW WITH GOVERNOR ABBOTT Going for the Going for the Baker’s Dozen Baker’s DozenTEXAS ECONOMIC DEVELOPMENT GUIDE 31 to attract and retain these growing businesses and the jobs they create in diverse communities across this great state. Working together, we continue to build a bigger, better Texas for decades to come.” How Texas is Leading America In the governor’s recent “2024 Report to the People of Texas,” he outlined several other key achievements: • The Texas economy surged to become the eighth largest in the world at $2.4 trillion. • Texas continues to stake its claim as America’s most diverse business state. One in five Hispanic business owners in the U.S. now resides in Texas, as does one in every 10 Black business owners in America. In addition, more than 1.3 million women-owned businesses now call Texas home. • Texas once again leads the nation in population growth. Texas gained more new people than any other state in the nation in 2023 and now has a record 30.5 million inhabitants. Governor Greg Abbott accepting Site Selection Magazine’s Governor’s Cup in March 2024 for a record- shattering 12th consecutive year and 19th win overall for Texas — records unmatched by any other state. Photo courtesy the Office of the Governor of Texas32 TEXAS ECONOMIC DEVELOPMENT GUIDE • Texas led the nation in total jobs added in 2023. • The booming Texas economy produced the largest budget surplus in state history. • More Fortune 500 companies choose Texas for their headquarters than any other state. The list of accolades goes on, but Abbott does not let this track record of success justify any complacency in him or anyone else in his administration. Far from it, he keeps pressing for more growth and prosperity, not just for all Texans, but for all Texas communities across his vast state. That’s why he pushes for more state investment into public schools, community colleges, universities, medical research centers and trade schools. It also motivates him to push the state to do more to protect its citizens — in their homes, on their streets and at the border. The two biggest economic development wins for Governor Abbott in 2023 were passing property tax relief and signing a new incentives bill into law. The property tax cut was the largest in Texas history, saving Texans $18 billion in property tax payments to the state. More than 5.7 million Texas homeowners will benefit from this bill. On economic development, Abbott championed replacing Chapter 313 with JETI — the Jobs, Energy, Technology and Innovation Act. The Governor’s Office of Economic Development & Tourism describes the bill as follows: “JETI is a new competitive economic incentive program used to attract large, capital-intensive economic development projects, bringing new capital investment and creating new, high- paying jobs in Texas communities.” Educating a Technical Workforce Abbott understands, however, that the best investment that Texas can make to shore up economic development is an investment into the state’s workforce. That’s why he made sure the state approved $650 million to fund outcome- based learning in community colleges and another $305 million to train health care workers. He also supported $20 million to fund the MyTexasFuture. org website to help Texans find degrees and credentials that can enable them to gain marketable skills without incurring new debt. He also signed the Texas CHIPS Act into law last June. The bill sets aside $1.36 billion to bolster state efforts in attracting and growing more investment in semiconductor manufacturing and all aspects of this sector’s rapidly expanding supply chain. Separately, the State of Texas set aside an additional $200 million to fund Texas A&M’s creation of the new Texas Space Institute to advance research and development in space exploration. This is part of the $350 million that Texas allocated to the Texas Space Commission and the Texas Aerospace Research and Space Economy Consortium. In his report to the people of Texas, Abbott explained his business climate philosophy succinctly: “The nation’s leading CEOs cite our pro-growth economic policies — with no corporate income tax and no personal income tax — along with our strong and growing workforce, easy access to global markets, robust infrastructure, and predictable regulations,” he said. “These business “ The nation’s leading CEOs cite our pro-growth economic policies — with no corporate income tax and no personal income tax — along with our strong and growing workforce, easy access to global markets, robust infrastructure, and predictable regulations. ” — Governor Greg Abbott34 TEXAS ECONOMIC DEVELOPMENT GUIDE advantages found only in Texas grow more than the bottom line. When freed from the stranglehold of over- taxation and runaway regulation, new ideas flourish here.” No wonder then, that for almost two decades running, Texas has been named as the No. 1 Business Climate in the nation by Chief Executive Magazine. Since 2015, nearly 300 companies have relocated their corporate headquarters to Texas. The CEO of Texas — In His Own Words We recently caught up with Governor Abbott for the following interview on this and many other topics related to economic development. As you will see in his comments below, he is not one to settle for finishing second in anything. You just picked up the Site Selection Governor’s Cup award from Site Selection magazine. This is a record 12thstraight year that Texas has claimed this honor. What are the business environment factors that make this record run possible? GOV. ABBOTT: Texas has won the Governor’s Cup every year that I have been Governor, and we are proud to accept the award for the 12th consecutive year and 20th win overall for Texas. This record- breaking success is thanks to the best business climate in the nation and pro-growth economic policies — with no corporate income tax and no personal income tax — along with our highly skilled, growing and diverse workforce, easy access to global markets, robust infrastructure, and reasonable regulations. These business advantages found only in Texas grow more than the bottom line. When freed from the stranglehold of over-taxation and red tape, businesses flourish and Texans prosper. For nearly 200 years, Texas has offered the freedom and opportunity for people to succeed that cannot be found anywhere else. Governor Greg Abbott rang the Nasdaq closing bell to celebrate Texas’ economic achievements during a virtual bell ringing ceremony in November 2023 at the Governor’s Mansion in Austin. Photo courtesy the Office of the Governor of TexasTEXAS ECONOMIC DEVELOPMENT GUIDE 35 What is the secret sauce behind Texas’ sustained run of economic development dominance? GOV. ABBOTT: Our secret to success is simple: We want businesses to succeed, because when businesses succeed, Texas succeeds. As well, entrepreneurs know they have the freedom to grow their business in our great state. The State of Texas moves at the speed of business. By cutting red tape and burdensome regulations, businesses can invest more quickly in our communities and create new, good-paying jobs for hardworking “ By cutting red tape and burdensome regulations, and making strategic, continuing investments in infrastructure, education and workforce development, Texas offers businesses the freedom to grow and Texans the tools to prosper. ” — Governor Greg AbbottNext >