SOURCE: Chief Executive Magazine

January 22, 2008 08:30 ET

CEOs Weigh in on Best, Worst States to Do Business

Texas, Nevada, North Carolina Top List as Best States; California, New York, Michigan Are the Worst

MONTVALE, NJ--(Marketwire - January 22, 2008) - While much of the nation's focus is jumping from state to state during the presidential primary race, CEOs did their own "state-jumping," ranking the best and worst states to do business. In an annual polling by Chief Executive magazine, CEOs ranked the states with no income tax as the top two states for business -- Texas and Nevada -- and those highly-regulated states as the worst two -- California and New York. These same states have been ranked as the best and worst two states to do business in for the past three years.

Both the top third and worst third spots experienced a change this year. North Carolina, replacing Florida, returned to the third place after coming in fourth last year. Michigan, home of the struggling auto industry, took the worst third state spot, replacing Massachusetts.

Chief Executive's fourth annual "Best & Worst States" survey was conducted right after the New Year, and asked 605 top executives to evaluate their states on a broad range of issues, including proximity to resources, regulation, tax policies, education, quality of living and infrastructure. Providing additional insight to the evaluations, CEOs were also asked to grade each state based on the following criteria: 1) Taxation & Regulation, 2) Workforce Quality, and 3) Living Environment.

"Overall, the message CEOs are sending is that over-taxed and over-regulated states are not conducive to the health of their businesses," said Ed Kopko, CEO and Publisher, Chief Executive Group. "This is the message they've been communicating since our poll started in 2005. However, in states like California and New York, where we are increasingly facing a shrinking population, the message seems to have fallen on deaf ears, as CEOs continue to be extremely frustrated with the business-unfriendly practices in these states."

HIGHLIGHTS OF THE SURVEY

Texas: Texas scored strong in each of the three categories: It received an "A-" in the Taxation & Regulation category and a "B+" in the other two categories.

Comments

Voicing the positive sentiment of many respondents, Charles Hannabarger, President and CEO of PSI Associates, said, "Texas has a strong economy with a diversified economic base. The cost of living is low and the quality of life is very good. The attitude and capabilities of the workforce are outstanding!"

Nevada, North Carolina: Nevada and North Carolina also performed strongly: Nevada got an "A" for Taxation & Regulation, but received a "B-" in Workforce Quality and a "B" for Living Environment.

North Carolina got a "B+" for Taxation & Regulation and Workforce Quality and an "A-" for Living Environment.

Comments

Though very supportive of low taxes, CEOs criticized the status of the education system in low tax states and called for improved public school system and better infrastructure.

Florida: In an interesting twist, Florida, the third best state in last year's polling, plummeted this year to the tenth best state on concerns over its education system and workforce quality. Florida, which is widely seen as an important stronghold in presidential hopeful Rudy Giuliani's campaign for the White House, received a "B-" for Workforce Quality and a "B+" in the other two categories.

Comments

General consensus among Florida CEOs was that the government should cut income and property taxes. Additionally, CEOs called on the state government to put in place programs that encourage more professionals to move into the state and better educate the local talent.

California: California was ranked as the worst of all states to do business. It received a "D" in Taxation & Regulation, and a "B-" in both the Workforce Quality and Living Environment categories.

Comments

Voicing the sentiments of the majority of CEOs in California, John Keffala, President of Forbes Business Plan Advisors, said, "California continues to be a tough state to do business in." The main concerns cited by California-based CEOs were high taxes, over regulation, illegal immigration and cost of living.

New York: Notorious for onerous legislation and high taxes, New York scored similarly to California in Taxation & Regulation category, receiving a "D," while getting a "B-" for the Workforce Quality and a "C-" for its Living Environment.

New York has additional significance this year, as main competitors for the presidency from each party, Rudy Giuliani for the Republicans and Hillary Clinton for the Democrats, are from the Empire State.

Comments

Similar to California, the majority of CEOs in New York called for lower taxes, less regulation and less government spending as well as more business-friendly policies.

Additionally, CEOs were very vocal about their discontent with New York Governor Eliot Spitzer, indicating that he had done nothing to improve conditions for businesses in NY since he took office. Some CEOs went as far to say that the "Governor is a liability" and "has a hostile image toward business."

Massachusetts: The home state of former Governor Mitt Romney, Republican presidential hopeful, was ranked as the fourth worst state for business. Like New York, Massachusetts got a "D" and a "B-" for Taxation & Regulation and Workforce Quality, respectively. It performed relatively stronger than New York in the Living Environment category, receiving a "C+."

Comments

Massachusetts-based CEOs, voicing similar sentiments as their counterparts in the other two worst states, called for lower income taxes, bringing the state's stance on social and civil policies closer to the center, as well as more programs for small businesses.

For additional information regarding the confidence of public- and private-company CEOs, visit our full report at http://www.chiefexecutive.net/ceoindex.

ABOUT CHIEF EXECUTIVE MAGAZINE

Chief Executive is a controlled circulation magazine that has been published since 1977. It reaches 42,000 chief executive officers and their peers, reaches a total readership of 228,000. Chief Executive Group facilitates "Chief Executive of the Year," a prestigious honor bestowed upon an outstanding corporate leader, nominated and selected by a group of his or her peers. Robert Ulrich, A. G. Lafley, George David, Fred Smith, Bill Gates, John Chambers, Michael Dell and Sandy Weill are just some of the leaders who have been honored during the award's 22-year history. Chief Executive also organizes roundtable meetings and conferences to foster opportunities for top corporate officers to discuss key subjects and share their experiences within a community of peers. Visit www.chiefexecutive.net for more information.

Best and Worst States for Business: January 2008

Best States         Rank 2008       Rank 2007       Rank 2006
Texas                  1st             1st             1st
Nevada                 2nd             2nd             2nd
North Carolina         3rd             4th             3rd
Virginia               4th             9th             7th
Arizona                5th             5th             5th
Florida               10th             3rd             4th

Worst States        Rank 2008       Rank 2007       Rank 2006
California            51st            51st            51st
New York              50th            50th            50th
Michigan              49th            47th            48th
Massachusetts         48th            49th            49th
New Jersey            47th            46th            46th

Biggest Gainers   Positions Gained
Oregon                 14
Alabama                11
Ohio                    8
Vermont                 8

Biggest Losers    Positions Lost
New Mexico             13
Wisconsin              11
Connecticut            10

State              CEO Rank   Growth Rank
Texas                  1          15
Nevada                 2           2
North Carolina         3          12
Virginia               4          10
Arizona                5           3
Tennesse               6          27
Georgia                7          25
Indiana                8          46
South Carolina         9          36
Florida               10           6
Delaware              11          13
Alabama               12          17
Colorado              13          16
New Hampshire         14          32
Utah                  15           5
Idaho                 16           1
Iowa                  17          20
South Dakota          18          30
North Dakota          19          26
Missouri              20          44
Oklahoma              21          18
Minnesota             22          31
Montana               23          11
Kansas                24          29
Wyoming               25          40
Kentucky              26          37
Oregon                27           4
Nebraska              28          33
New Mexico            29           7
Washington            30          14
Alaska                31          39
Maryland              32          22
Rhode Island          33          43
Ohio                  34          50
Maine                 35          34
Vermont               36          28
Arkansas              37          23
Hawaii                38           8
Pennsylvania          39          48
District Of Columbia  40          19
West Virginia         41          47
Connecticut           42          24
Illinois              43          45
Wisconsin             44          42
Mississippi           45          49
Louisiana             46          38
New Jersey            47          41
Massachusetts         48          35
Michigan              49          51
New York              50          21
California            51           9

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