< Previous8 BUS I N E SS I N U T A HG O V E R N O R ’ S I NTE RV I E WUtah Gov. Gary Herbert speaks like a leader who is on a mission. Direct, succinct and specifi c, he wastes little time in getting to the heart of the matter.Ask him to describe his philosophy toward business investment in Utah, and he gets straight to the point. It’s a practice that has served him and his state well.U.S. News & World Report recently ranked Utah as the No. 3 Best State Overall for 2018, based on a variety of metrics. Those measures included the second-best economy in America; the No. 3-ranked state in education; fi rst in fi scal stability; and eighth in infrastructure.The U.S. Bureau of Labor Statistics reports that Utah boasts the sixth-most industrially diverse economy in the country.Performance numbers like these don’t happen by accident. They occur because state leaders adopt a plan and stick to it. For Gov. Herbert, that means following a rigorous approach that adheres to a few basic principles: keep taxes low; keep government effi cient; manage state fi nances in a fi scally conservative manner; and encourage and incentivize private business investment in every corner of the state.By doing these things, Utah has elevated its business climate to one of the very best in America. Herbert says it’s his No. 1 goal to keep it that way, and to keep elevating it. In the following conversation with this magazine, he explains why.by R ON STA R N E RELEVATEDBusiness ELEVATEDBusinessELEVATEDBusinessGov. Herbert uses ‘fundamentals’ to build a business climate that keeps rising.Photos courtesy of Utah GOED10 BUS I N E SS I N U T A HBy many measurements, the Utah economy is booming. To what factors do you attribute this run of economic success?HERBERT: No great secret. It comes down to fundamentals — competitive tax rates; minimized obstacles to success by making sure regulations are not burdensome; and efficiency in state government. We now have 800,000 more people who call Utah home. We do more with less. We have increased efficiency by over 25 percent in two years and we will do that again over the next two years. We are the most fiscally stable state in America, with a triple A bond rating and a significant rainy-day fund. We have a healthy respect for the free market. Wealth is created by those in the private sector, not by those in government. The private sector creates jobs. Our slogan is that we want to empower you, give you every opportunity to be successful, and keep government off your backs and out of your wallets. How has your administration revamped the regulatory environment in Utah for the benefit of businesses?HERBERT: Government regulations can be a maze that is hard to navigate. We eliminated over 400 regulations and rules from the books. We review all regulations that come out. If additional costs are imposed, we work with the private sector to bring that to the attention of the Legislature. We help protect the marketplace. We are very much a regulatory-wary state. We monitor them all the time.What major tax reform initiatives have you enacted to ensure the overall competitive position of business and industry in Utah?HERBERT: It is an ongoing process of tax policy. What was appropriate a few years ago may be questionable today and wrong tomorrow. What they do in Washington impacts our states. There is a need to stay current. Tax policy is involved in broadening the base and lowering the rate. That way, everybody pays a little, but no one has the burden to pay a lot. A year ago, we introduced tax reform. Some loopholes needed to close. Every line item in the budget needs debate. There is no earmarking. And we reduced Photos courtesy of Utah GOED12 BUS I N E SS I N U T A H“We lead the nation in growth internationally because we speak 130 languages. We are probably the most bilingual place in the world.” — Utah Gov. Gary Herbertthe income tax rate. We gave an $80-million income tax cut and reduced the personal income tax rate to 4.295 percent. More reform will happen this year and it will be completed in 2019. The single sales factor will make us more competitive with other states and friendlier for manufacturers. We also are adjusting our general fund. User fees for roads are not as high. Some 55 percent of the cost of road construction comes from the general fund and 45 percent comes from the gas tax. We are adjusting this to account for the purchasing power that has changed. We are more competitive with our tax rates today. It is a step in the right direction. What rural development initiatives are you supporting to make sure this economic success reaches every corner of Utah?HERBERT: That is a concern for me. Our overall growth and development are spectacular. BLS says that on a per capita basis we are creating more private sector jobs than any other state in America. I also recognize there are pockets in rural Utah that are not sharing in this great success. Our GDP growth is averaging almost 3 percent a year — and our $319-billion GDP is a record high. We also have a record low unemployment rate of just above 3 percent. We are addressing that issue. We are meeting with all our county officials in rural Utah and asking — what is your economic development plan? We want to be your partner. We have a program for any job that pays $4,000 above the community average; there is an incentive to help that company grow in rural Utah. We also have a jobs initiative in rural Utah — our Rural Business Expansion Program includes our Utah Pathways and Talent Ready Program. Plus, we have an internship and apprenticeship program in our aerospace industry. Seniors in high school or students in community college can get training and credit in school and find a great career pathway. This will help them find job opportunities. Creating 25,000 new jobs by 2020 is the goal for the 25 counties in rural Utah.What is Utah doing to prepare its workforce to be globally competitive?HERBERT: It is not all about the money. Record amounts of money into education will help, though. Better counseling and better teacher pay are also needed. So too is encouraging parental involvement. The marketplace is now global in nature. All those go hand in hand with exposing our young people to better opportunities so that they can make informed decisions. Our goal is 66 by 2020 — two-thirds of our adult population will have post-high school education by 2020. You can’t just start at a high school diploma anymore. You must go beyond that. There is a variety of things they can do. We will have a skilled labor force. Unique to Utah is the fact that we lead the nation in growth internationally because we speak 130 languages. We are probably the most bilingual place in the world. What role does quality of life play in Utah’s overall business competitiveness?HERBERT: People want to come here because they like the quality of life in Utah. We have five national parks, 43 state parks and 14 wonderful ski resorts being designed to be year-round resorts. We have hiking trails and very friendly people. Gallup says we have the friendliest and most optimistic people in the country. Utah is a great place to live and raise children. People come here because they like the traditional values the state stands for. Number two is economic opportunity. We have more jobs than we have people. You will find employment that pays your bills and then some. We are the best state in America for lifting people out of poverty. Jobs are numerous and available here. We work with people and find where their deficiencies are. If you are on Medicaid, our program’s average length of time is 9 or 10 months. We help you get your skills retooled and help you get a job or find a better job. We lead the nation in volunteerism, by far, for the last 15 years in a row. We are the number one state for charitable giving. That is why we are the fastest growing state in America and our future is very bright. Laffer says Utah has the brightest economic future in the country. Come here and you will see why. 14 BUS I N E SS I N U T A Hor more than years, the economy of Utah was built primarily on farming and mining. As the land prospered, so did the people who lived and worked on it.Fast forward to , and you’ll fi nd one of the most diverse economies in America. From aerospace to I.T. and software, some of the state’s leading industries are no longer built on the land, but on the brain power of the talent that has found its way to the Silicon Slopes.Val Hale, executive director of the Governor’s Offi ce of Economic Development, says the remaking of the Utah economy began in the s and continues today.“We have a business-friendly Legislature that is intent on enacting business-friendly laws and regulations, including low corporate and individual taxes,” says Hale. “The result is a fertile soil for businesses to grow and prosper.”Forbes has named Utah the Best State for Business eight of the last nine years, including the No. ranking again for . “Utah scores well across the board, with particularly high marks for its regulatory climate and growth prospects,” notes Forbes. “Gov. Gary Herbert has made cutting red tape a tenet of his administration since he was elected in . He’s eliminated or signifi cantly changed nearly regulations during the past seven years. Utah also boasts a business-friendly legal climate and fi scally sound government A concerted approach to pro-growth policy has made Utah into an economic force.Above: Salt Lake City skyline.Image: Getty Imagesby R ON STA R N E RThe Best State for BusinessB U S INE S S C L IM A T E O V E R V IE WFB U S I N E S S I N U T A H 15— it’s one of only states to hold a AAA bond rating from all three rating agencies.”In various measures, Utah consistently outperforms other states. Utah boasts the highest growth in nonfarm payrolls over the past year and the third highest GDP growth. Utah is tied for fi rst with California in most independent inventor patents per capita.Utah’s cities outperform as well. When the Milken Institute released its annual Index of Best-Performing Cities in January, three Utah locations surged to the top: Provo-Orem, Salt Lake City and St. George. Provo-Orem ranks No. among all large metro areas in the country, while Salt Lake City ranks second. St. George ranks No. among all small metros.Hitting the Bullseye of 6 TargetsNatalie Gochnour, associate dean of the David Eccles School of Business at the University of Utah and the director of the Kem C. Gardner Policy Institute, says the current economic performance of the state is virtually unprecedented.“This is a very prosperous time in Utah,” she says. “Utah had the fastest job growth in the country in , and our labor market fundamentals remain strong. Our year-over-year job growth of . percent is twice the national rate, and our unemployment rate is just . percent, compared to the nation’s rate of . percent. By many measures, the Utah economy is the strongest in the nation.”Hale says the state feeds this growth by focusing on six target industry clusters:• Aerospace and defense• Software and I.T.• Life sciences• Energy• Outdoor products and recreation• Financial services“We have more than , jobs in aerospace and defense,” says Hale. “From rear stabilizers for the Boeing to Airbus component parts, every fi ghter jet in the Western Word uses carbon fi ber composites made in Utah.”In software and I.T., Utah leads the nation in tech growth. “We registered . percent growth in this sector last year,” notes Hale. “We have more than , jobs among , companies on the Silicon Slopes.”In life sciences, more than , biomedical fi rms call Utah home. They account for , jobs — or . percent of 16 BUS I N E SS I N U T A Hstate workers — and produce . percent of state GDP.The energy sector employs , people in Utah with an average annual salary of $ ,, with oil and solar ranking among the largest generators of energy.In outdoor recreation, Hale says that “Mother Nature played favorites with Utah and blessed us with some of the best scenery in the United States.” This sector contributes $ . billion to the state economy and accounts for $ . billion in annual wages.Financial services, meanwhile, remains strong as Utah ranks No. in the nation for banking assets. “Fintech is on the rise in Utah,” says Hale. “Purple Mattress was just a year and a half old when it sold for over a billion dollars.”The Factors Behind the SuccessGochnour says several assets enable this success. “The causes of Utah’s growth are multi-faceted,” she notes. “We have a growing labor pool, a healthy and well-educated workforce, a high state fertility rate, and a very young and growing and tech-savvy population.”“This is a very prosperous time in Utah. Utah had the fastest job growth in the country in 2017, and our labor market fundamentals remain strong. By many measures, the Utah economy is the strongest in the nation.”— Natalie Gochnour, Associate Dean, David Eccles School of Business, University of Utahpeople in Utah with an average annual salary of $ ,, with oil and solar ranking among the largest generators of energy.In outdoor recreation, Hale “This is a very prosperous time in Utah. Utah had the fastest job growth in the country in 2017, and our labor market fundamentals remain strong. By many measures, the Utah economy is the strongest in — Natalie Gochnour,market fundamentals remain strong. By many measures, the Utah economy is the strongest in — Natalie Gochnour,“We are in the interior West, halfway between the Continental Divide and the Pacific Ocean and halfway between Canada and Mexico. That makes Utah the perfect place for commerce in the West. We are in the exact center of the West.”The shining star of the Utah economy, however, remains technology. “Our land costs, our university research, our advantages all became apparent to people in the technology world,” says Gochnour, “The Point of the Mountain is the hotbed of tech companies in Utah now. It is also called Silicon Slopes. You could say that we have reached the tipping point.”Tipping or not, Hale says the Governor’s Office is not content to rest on any laurels. “We’re bidding to host the 2026 or the 2030 Winter Olympic Games, and we just created a global inland port in Salt Lake City,” he says. “The Salt Lake City International Airport has a huge expansion underway, and we’re moving our prison from the middle of Silicon Slopes to closer to the airport to free up 700 acres of prime real estate for development. We hope to have a number of companies trying to capitalize on that location within the next three years.”He then threw out an open invitation to any company that wanted to join him: “If you want to double your sales and double your revenues, come to Utah,” he said. “There is not a better place to do business than Utah.” Next >