The 2023 Governor’s Cups

Congratulations again on our recognizing Texas in November as having the nation’s best business climate, and on Texas securing its 12th consecutive Governor’s Cup. Being the world’s eighth largest economy helps, but where else should credit for these accomplishments be directed?

Gov. Abbott: Thanks, Mark. I am proud Texas has been recognized by Site Selection for the best business climate in the nation and has again earned the much-coveted Governor’s Cup. We have quite the collection now, but there’s always room for more.

Thanks to the unmatched productivity of our young, skilled, diverse and growing workforce, Texas is the eighth-largest economy in the world. We have also experienced faster economic growth than the nation for five quarters in a row. Today, we lead the nation in exports and high-tech exports. And here in the state where the microchip was first born, the future of America’s semiconductor industry is already building for tomorrow as Texas ranks as the top state for semiconductor manufacturing and exports.

When choosing where to relocate or expand their businesses, more innovative industry leaders find themselves at home in Texas. They recognize the competitive business advantages found only in Texas. Industry-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 business-friendly regulations.

Texas offers room for businesses of all sizes to grow and their employees to succeed, to afford a home, and to enjoy a high quality of life in communities across our great state. In Texas, economic development is a team sport. It takes the work of many economic development organizations — both at the state and local level — working together to ensure Texas continues to lead the nation in relocation and expansion projects.

Together, we are building a bigger, better Texas.

Texas added more jobs in 2023 than any other state. Is this mainly generic growth, or is it more about companies moving to Texas from elsewhere?

Gov. Abbott: Texas is America’s jobs engine. Perhaps the greatest testament to the strength of the Texas model can be summed up in four simple words: More Texans are working. More Texans are working today than ever before in our state’s history. In fact, more Texans are working than 46 states have residents.

Thanks to the diverse industries investing in Texas, all major industry sectors in the state expanded over the year. And month after month, we continued to smash all previous records for total jobs, the number of Texans working, and the size of the Texas labor force.

A significant number of these jobs come from our already existing Texas companies, who choose to grow and expand in Texas. But we also welcome new companies that are relocating here from high-cost, overly regulated states and countries.

A magnet for talent and business investments, Texas proudly tops the nation for job growth through business relocations. And as home to more Fortune 500 headquarters than any other state, hundreds of publicly traded firms, and 3.2 small businesses and startups already growing here, Texas will long be a jobs juggernaut.

In the past, traffic congestion in the metros has been a concern. How is Texas’ infrastructure keeping up with all the growth?

Gov. Abbott: Thanks to our booming economy, Texas is making a historic 10-year, $142 billion investment to strengthen our roadways and build a next-generation transportation network.

Through this record transportation investment project, we are further improving roadway congestion and safety to meet the growing needs of Texans in our large metros, rural communities and everywhere in between. This plan not only connects Texans from every corner of our state, it also ensures that Texans and Texas businesses benefit from a robust infrastructure network to continue to thrive for generations to come.

In November, you approved the Texas Workforce System Strategic Plan for 2024 to 2031. What should readers know about how this plan will deliver the workers they will need in the future?

Gov. Abbott: With another Governor’s Cup win, Texas continues to dominate the nation for attracting job-creating business investments from across the country and around the world. Our young, skilled, diverse, and growing labor force and our No. 1 business climate are among the top Texas advantages that allow companies to grow and hardworking Texans to succeed.

To continue to meet the needs of employers in both expanding and emerging industries, Texas is making ongoing and significant investments in education, workforce development, and reskilling and upskilling programs. The Texas Workforce System Strategic Plan was developed by the Texas Workforce Investment Council, which is a part of my Economic Development & Tourism Office. Together with state agency partners and industry, they develop an eight-year plan which drives the workforce system activities across Texas.

More than 4 million Texans participate annually in workforce system programs administered by the state’s workforce system partners. The recently released Texas Workforce System Strategic Plan establishes a clear line-of-sight between workforce system goals, actions and outcomes, leading to a highly skilled and well-educated workforce for the next decade and beyond.

Is the border crisis having any effect on Texas’ ability to attract investment?

Gov. Abbott: From day one, President Joe Biden’s reckless open border policies have created an ongoing crisis at our southern border as record levels of illegal immigrants and deadly drugs like fentanyl pour into our country. While the federal government ignores this crisis, Texas continues to hold the line to defend our border communities, our state — and the nation.

Despite President Biden’s failure to act, Texas continues to prosper and attract investment even in the face of this crisis. Our vibrant communities in the Rio Grande Valley and across the border region are critical to the booming Texas economy. With a young, skilled, diverse, and growing workforce, we have seen continuing high levels of economic development projects in a region that offers unmatched potential for growth.

We are focused on ensuring the safety of all Texans across our great state as we continue to build the Texas miracle and grow our great economy.

You recently returned from an economic development mission to India. What are some takeaways that would be of interest to site selectors?

Gov. Abbott: At the end of January, I was proud to lead my second economic development mission to India, joined by Cecilia, Secretary Nelson and economic development, business and community leaders from across Texas.

According to Indian industry estimates, Texas is the most popular destination for Indian FDI capital investment and jobs created in the United States. In the last decade, companies from India have invested $1.4 billion in capital investment, creating more than 10,300 jobs. In 2022, Texas’ total trade with India totaled $20.4 billion, making India the state’s 11th-largest total trade partner.

Traveling to Mumbai and New Delhi, we met with company executives, business leaders and government officials to encourage continued trade, job creation and capital investment in Texas. Industries of focus included aerospace, cultural tourism, energy, information and communication technology, manufacturing, semiconductors and more.

As a result, I look forward to growing the already-strong economic partnership between India and Texas. This mission also strengthened our understanding of the deep cultural tenets share by the people of Texas and India: family, faith, compassion, and hard work. And I am confident this enduring bond and strong collaboration will continue for years to come.

How did the 88th Legislature advance your economic agenda?

Gov. Abbott: Our mighty Texas economy produced another record — the largest budget surplus ever in Texas as we headed into the 88th Legislative Session. Knowing those dollars belong to Texas taxpayers, I was proud to sign into law the largest property tax cut ever in the history of our great state: $18 billion, later approved overwhelmingly by Texas voters.

In addition to also delivering a historic and transformative investment in higher education, other priority legislation I signed into law will increase the competitiveness of Texas community colleges through a performance-based funding system.

The Texas Jobs, Energy, Technology, and Innovation (JETI) Act is a new competitive economic incentive program to attract large, capital-intensive economic development projects, bringing new investment and creating new, good-paying jobs in Texas communities.

The Texas CHIPS Act creates the Texas Semiconductor Innovation Consortium (TSIC) and the Texas Semiconductor Innovation Fund (TSIF) to leverage Texas’ investments in the semiconductor industry, encourage semiconductor-related companies to expand in the state, further develop the expertise and capacity of Texas institutions of higher education, and maintain the state’s position as the nation’s leader in semiconductor manufacturing. The TSIC and TSIF will be administered by the Texas CHIPS Office, a newly formed division within my Economic Development & Tourism Office.

Other new programs include the creation of the Texas Space Commission and the Texas Aerospace Research & Space Economy Consortium, the Texas Small & Rural Community Success Fund Program, specialty business courts and more.

Along with the existing “deal-closing” Texas Enterprise Fund, Texas will continue to make strategic investments to maintain our competitive advantages and ensure we have the economic development tools and programs to remain the premier destination for business in 2024 and beyond.

What business climate measures do you consider to be priorities for 2024?

Gov. Abbott: In Texas, we want businesses to succeed. Because when businesses succeed, all Texans succeed. That is the secret to our No. 1 business climate, as recognized by Site Selection in November.

Texas moves at the speed of business. By cutting red tape and burdensome regulations, businesses find the freedom to grow, and Texans have the tools to prosper.

There is also a common thread of teamwork and collaboration in our approach to economic development, and these partnerships are the key to our economic development success in Texas. I look forward to continuing to work alongside our state, local and regional economic development partners, as well as leaders in business and industry, as we keep Texas the best state for business — and home to yet another Governor’s Cup.

Governor Noem, congratulations to South Dakota on winning its first Governor’s Cup.

Gov. Noem: Thank you so much for recognizing South Dakota. We have a great team. A lot of times we focus on projects so much that we forget to celebrate. This will give us a good reason to celebrate.

The Freedom Works Here campaign to attract workers to South Dakota appears to be a huge success. Can you discuss its origin and results so far?

Gov. Noem: The number one issue I’ve been hearing about for the last 18 months is workforce. We broke the national record for the lowest unemployment in 2023 with the rate of 1.7%. Businesses are willing to train people on the job, but we needed to recruit those individuals. We started a conversation about how to convince people to move to South Dakota, and we wanted that to be very nimble but very targeted. We did a lot of data collection around the country and we found up to 8 million people who were willing to move for a job. That was very encouraging to us. We went back to those individuals, had more conversations, did some more studies and found about 3 million people willing to move to South Dakota.

This campaign was not just targeting everybody in the country with TV ads or digital ads. There was some of that because we recognized that there would be some organic interest. But we also specifically targeted individuals that we knew might be interested in moving to our state and gave them much more exposure to the marketing campaign. We talked in these ads about our ability to train people on the job and our apprenticeship programs. We’ve had more than 8,500 people come here and fill jobs. Every day we get calls from mayors or city council members that say this campaign is extremely effective, and it’s only six months old. Every governor is charged with filling workforce needs. I’ve been a big believer the last several years that the state that has the workers is the state that wins.

Freedom seems to be a notion behind much of South Dakota’s success. The Cato Institute recently named it the third freest state overall and third also in terms of economic freedom. How do you define freedom in the context of a state’s business climate?

Gov. Noem: A lot of it is freedom from a government that inserts itself in business decisions. I was just asked three times today why I don’t mandate certain things. I was asked in an interview recently why South Dakota didn’t mandate E-Verify for all our businesses. That’s never been our model here in South Dakota. Our model is to work with businesses and leave them as much flexibility as possible so that they can be successful. It helps them be more efficient too. If they spend more time out there being profitable and plugging resources back into their employees, that creates a healthier state for us than me forcing them to spend more time filling out paperwork or dealing with needless regulations. I view our business economy as a partnership. It’s not the government telling businesses what to do. I am partnering with them and asking what we can do to help them be more successful. That’s a very different mindset.

What’s on the mind of capital investors you meet with when they’re considering a South Dakota location? For example, is very low unemployment a concern?

Gov. Noem: That’s the first thing on their minds. For years, when I would talk to people, capital investors or in the venture capital space, we probably didn’t make the top 10 states they were looking at. We were doing well, but we weren’t the one they thought of quite often as a place to come. That’s changed dramatically. We can talk about the success of our businesses. Our people here work hard. We have a AAA credit rating, we have a fully funded pension plan, we have historic amounts of money in our reserves. We’ve invested in roads and bridges, we built a railroad across the state, put high-speed internet access across the state. And we’ve had the largest tax cut in South Dakota’s history last year too. All of that is to show to those folks who were thinking of investing in South Dakota that we have had conservative, business-minded leadership for many years. But now we’re being aggressive to make sure they know they can come here, and we will help them be successful.

And now you have a Site Selection Governor’s Cup to talk about.

Gov. Noem: My economic development commissioner a couple of years ago said we are just not on the site selectors’ radar yet or as much as we should be. We need to get on their radar, which is what we are working on. This recognition is especially wonderful for us because we feel like it is an acknowledgment of us focusing on becoming a place where businesses look and where investment looks, that we finally have gotten on the radar and that people know our heart for economic development is paying off.

You mentioned a tax cut. Was that the sales and unemployment tax cuts?

Gov. Noem: Yes, the unemployment tax cut was the first bill I signed in the last legislative session. The idea for that tax cut came from one of our state employees that worked in our Department of Labor who said we don’t need to assess this high a rate on our businesses. It’s not necessary. We love that we have state employees who think that way and brought to our attention that we had the ability to do this tax cut. We then brought forward lowering the sales tax rate from 4.5% down to 4.2%. That was a four-year change that was adopted by the legislature and our goal is to make it permanent.

For years, when I would talk to people, capital investors, or in the venture capital space, we probably didn’t make the top 10 states they were looking at. We were doing well, but we weren’t the one they thought of quite often as a place to come. That’s changed dramatically.

How does the state work with companies once they are established in South Dakota? Can they find the resources they need quickly?

Gov. Noem: Yes, that is incredibly important, and it comes down to relationships. Our number one industry is agriculture and second is tourism, which is all about continuing to tell our story, and our tourism businesses rely heavily on that close relationship because they need to be nimble in how they talk to people. Beyond that, it’s financial services and then manufacturing. These are all relationships we need to maintain and build on. We have councils and advisors from each of those industries that have a direct line to the governor’s office.

Something I have done to help with those areas is invest in outside organizations that give us the ability to tell our story. We set up a new South Dakota trade office that is helping us work with people to build up their markets. After my time serving in Congress, especially on the Ways and Means Committee, I learned the value of going out and building those relationships. South Dakota wasn’t necessarily capitalizing on promoting itself and its industries as a state. We were relying too much on the country and trade agreements nationally in terms of our economies and businesses. Now we’re taking more ownership of our future and being super aggressive in making sure these businesses that are here already are getting new opportunities to find new customers that they never had before.

Access to child care and affordable housing are two increasingly important site location criteria. Describe that landscape there for families moving from out of state.

Gov. Noem: We have focused a lot on that in the last two years. That’s been a problem with the growth — having a competitive housing industry for families. We did a grant program through the state and a low-interest loan program through our Housing Authority. It’s a public-private partnership where the local community can partner with us, and then the developer partners with the state. So there are three partners in this investment that goes in to triple our effort in building housing in communities across the state. That is being deployed now. When the state, say, gives $20 million to a community for a project, it’s compounded by the partnership with that community and with private industry that’s partnering with us.

When it comes to child care, many of our providers needed help with background checks. They needed them to be faster. One issue is recruiting a workforce. It’s hard to get them to commit to working with children if they can’t get benefits like health care. We’ve done about $30 million of grants to providers to allow them to upgrade, add safety equipment or address other needs they have and to train their workforce. We are at the end of the first year of those grants being available and another $10 million is going out. None of this would have been possible if we hadn’t made the right business-friendly decisions that have helped our businesses thrive. That’s one of the reasons I think our economy has done so well and we have ended up with historic revenues that we can use in a wise way to make a difference not just for the short term but in the long term.

Two industries are emerging in South Dakota that I wouldn’t normally associate with the state — cybersecurity and quantum computing. What’s behind the growth of these industries there?

Gov. Noem: I didn’t think I would be talking about quantum computing either. We have a university, Dakota State University [in Madison], that has been a top 10 leader in the country for over a decade now in cybersecurity. In fact, a lot of the NSA employees get trained there. So even the government and the federal three-letter agencies tasked with securing our most top-secret information get their training in South Dakota.

We’ve had some significant funds that have come in from donors that the state has matched to double the size of that university. We started a new location in Sioux Falls with a new campus. We will be able to train people in a larger city that will allow more research to go on and more unique training opportunities and partnerships because of the businesses that are locating in Sioux Falls.

As for quantum computing, we’re putting forward a doctoral program at DSU because there are only a handful of universities that are doing this. If we train the workforce here, the businesses are more likely to be here. As governor, my responsibility is to diversify our economy. The more industries we have here that are doing well, the more stable our economy is.

What’s the latest on efforts to lure firearms companies from California and other locations?

Gov. Noem: They’re going great. We’ve always had a firearms and ammunition presence in the western half of the state, and we have a few companies in the eastern half. We’ve seen some being incredibly successful lately like Silencer Central in Sioux Falls, which has done very well, as have a lot of smaller custom businesses throughout the state. The next-generation bomber for the U.S. Air Force will be based at Ellsworth Air Force Base in western South Dakota. There’s a billion and a half dollars being invested in infrastructure and build-out, which gives us a unique opportunity to recruit DoD contractors and businesses to support that base.

There’s a billion and a half dollars being invested in infrastructure and build-out, which gives us a unique opportunity to recruit DoD contractors and businesses to support that base.

It also gives us the opportunity to talk to businesses that are in the firearms and ammunition industry. A lot of these airmen end up retiring to the Black Hills. The population there very much supports the industry, and frankly this industry is being persecuted in other states. We’ve seen firearms and ammunitions companies over-regulated. We want them to know we support Second Amendment rights here in South Dakota and they are more than welcome to come here and thrive.

Are there recent new projects or expansions you would point to that illustrate South Dakota’s competitiveness relative to other states that may have been in contention?

Gov. Noem: One is 3M [$158 million expansion in Brookings], because they’re a worldwide corporation and could have chosen to move or invest in other states or other parts of the world. Instead, they chose South Dakota. It’s encouraging to me to see that. We’ve seen a 65% increase in our dairy industry just in the last year or so, and that’s because we’ve had so much focus on building that out, recognizing that we are centrally located, and we are in a part of the country that is best suited to supply that industry.

Another is High Plains Processing, which is building a soybean processing plant in Mitchell right now, which I’m excited about because it will create about 75 jobs. It’s a huge investment — it’s a more than $500 million project. 3M shows that we are still the place to be, and the soybean processors are beginning to expand as well.

For me, the new industries like cybersecurity are fun. But it’s great for me to see these businesses that have been committed to South Dakota decide that we’re worth continuing to invest in.

How does South Dakota deliver predictability to capital investors?

Gov. Noem: It’s about stable leadership. We don’t change our values, and we don’t have a tax system that is always changing but rather getting better all the time. As for regulations, we’re consistently cutting them, not adding them on. There’s the fact that we don’t have debt. Instead, we have historic reserves. All of those and our constant investment in infrastructure should tell the story of how stable South Dakota is. Consistency in leadership is a powerful message because we have seen in the last several years from state to state that leadership has consequences for businesses. In South Dakota, I’m thankful that we have a great track record there. Businesses are very reassured by the level-headed, common-sense leadership that makes this a state that’s open for business.