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2019 Top States for Doing Business: Georgia Ranks #1 Sixth Year in a Row

The top-ranked states have landed on the radar of today’s site selection consultants because of their low business costs, generous incentive programs, and competitive labor environments, among other probusiness advantages.

Q3 2019
Where will the next high-profile development project land? That’s a bit hard to say. After all, the proverbial crystal ball exists only in fairy tales and a couple of the “Harry Potter” stories.

That said, there are plenty of good ways to make informed assessments of the various American states and their suitability for big-headline business projects. Just ask the experts who help guide those businesses in their location decisions. They know what characteristics matter, and which places excel in those various traits.

Sum up all of their feedback and some distinct patterns emerge. One conclusion is that it’s hard to go wrong with a site in Georgia. The Peach State sits atop this year’s Area Development list of “Top States for Doing Business.” Again. Georgia has been ranked first for six years in a row. Tennessee, in second place, makes regular appearances in the top five; same with third-place South Carolina. Alabama is a perennial favorite in the upper echelons, and ranks fourth this year, and if you look back over previous years’ lists, you’ll see that fifth-place North Carolina is perpetually well-regarded, too.

These overall rankings are determined by crunching assessments in a dozen different attributes. States at the top of the overall list tend to do well in multiple categories. But it’s worth checking out who excels at what, because each project has its own specific needs when it comes to location factors.

TOP STATES FOR DOING BUSINESS 2019

  1. 1. Georgia
  2. 2. Tennessee
  3. 3. South Carolina
  4. 4. Alabama
  5. 5. North Carolina
  6. 6. Texas
  7. 7. Mississippi
  8. 8. Louisiana
  9. 9. Ohio
  10. 10. Indiana
  11. 10T. Virginia
  12. 12. Kentucky
  13. 12T Florida
  14. 14 Arkansas
  15. 15. Oklahoma
  16. 16. Arizona
  17. 17. Iowa
  18. 18. New York
  19. 19. Michigan
  20. 20. Missouri

Individual Categories

Overall Cost of Doing Business

  1. 1. Tennessee
  2. 2. Texas
  3. 3. Georgia
  4. 3T. South Carolina
  5. 3T. Alabama
  6. 6. North Carolina
  7. 6T. Mississippi
  8. 8. Arkansas
  9. 9. Florida
  10. 10. Indiana

Corporate Tax Environment

  1. 1. Texas
  2. 2. North Carolina
  3. 3. Georgia
  4. 3T. Florida
  5. 5. Tennessee
  6. 6. Alabama
  7. 7. Indiana
  8. 8. South Dakota
  9. 8T. Nevada
  10. 10. Mississippi

Business Incentives Programs

  1. 1. South Carolina
  2. 2. Georgia
  3. 2T. Tennessee
  4. 4. Alabama
  5. 5. Mississippi
  6. 6. Texas
  7. 7. Louisiana
  8. 7T. Ohio
  9. 9. North Carolina
  10. 10. Indiana

Access to Capital & Project Funding

  1. 1. California
  2. 2. New York
  3. 3. Georgia
  4. 4. Texas
  5. 5. Tennessee
  6. 5T. Ohio
  7. 5T. North Carolina
  8. 5T. Massachusetts
  9. 9. South Carolina
  10. 9T. Virginia
  11. 9T. Florida

Competitive Labor Environment

  1. 1. Georgia
  2. 2. Texas
  3. 3. Tennessee
  4. 3T. North Carolina
  5. 5. South Carolina
  6. 5T. Alabama
  7. 5T. Indiana
  8. 8. Ohio
  9. 9. Virginia
  10. 9T. Arizona

Leading Workforce Development Programs

  1. 1. Georgia
  2. 2. South Carolina
  3. 3. Louisiana
  4. 4. Alabama
  5. 5. North Carolina
  6. 6. Tennessee
  7. 7. Virginia
  8. 8. Ohio
  9. 9. Kentucky
  10. 10. Oklahoma

Shovel-Ready Sites Program

  1. 1. Tennessee
  2. 2. Georgia
  3. 3. South Carolina
  4. 4. North Carolina
  5. 5. Alabama
  6. 6. Ohio
  7. 7. Texas
  8. 7T. Kentucky
  9. 9. Virginia
  10. 9T. Mississippi
  11. 9T. Missouri
  12. 9T. Iowa

Cooperative & Responsive State Government

  1. 1. Tennessee
  2. 1T. Georgia
  3. 3. South Carolina
  4. 4. Alabama
  5. 5. North Carolina
  6. 6. Texas
  7. 7. Virginia
  8. 7T. Mississippi
  9. 7T. Indiana
  10. 7T. Arkansas

Favorable General Regulatory Environment

  1. 1. Alabama
  2. 2. Texas
  3. 3. Georgia
  4. 4. South Carolina
  5. 5. Tennessee
  6. 6. Mississippi
  7. 7. Arkansas
  8. 8. North Carolina
  9. 8T. Kentucky
  10. 8T. Louisiana
  11. 8T. Iowa

Favorable Utility Rates

  1. 1. Tennessee
  2. 2. Georgia
  3. 3. South Carolina
  4. 3T.
  5. 5. North Carolina
  6. 6. Kentucky
  7. 6T. Louisiana
  8. 8. Alabama
  9. 8T. Idaho
  10. 8T. Mississippi
  11. 8T. Texas

Most Improved Economic Development Policies

  1. 1. Ohio
  2. 2. Georgia
  3. 2T. Alabama
  4. 4. North Carolina
  5. 4T. Arizona
  6. 6. Tennessee
  7. 6T. Virginia
  8. 6T. Kentucky
  9. 6T. Indiana
  10. 10. Michigan

Speed of Permitting

  1. 1. Georgia
  2. 1T. Alabama
  3. 3. South Carolina
  4. 4. Tennessee
  5. 4T. Mississippi
  6. 6. North Carolina
  7. 6T. Arkansas
  8. 8. Louisiana
  9. 9. Virginia
  10. 9T. Texas
First, A Caveat About Superlatives
Our “Top States” are determined through a survey of well-respected site/location consultants and specialists. These are experts who are well acquainted with which states have the friendliest tax or regulatory environments, which lead in workforce development, which have the most competitive cost of doing business, and so forth.

It’s a compilation of data that’s both useful and thought-provoking — but the consultants who had input into the lists shared here will be the first to tell you that this isn’t the last word on what the very best site is for any given project. Depending on a project’s specific needs, the ideal location could be in a place at the top of one of these lists, or further down, or not on any list at all.

Places not listed here are unquestionably perfect for attracting certain types of workers, or for proximity to specific kinds of resources. Places absent from these lists may still win the day because of particular supply chain considerations, or they may have an available building that is unbeatable for the particular need. The places we spotlight here are impressive and excellent options — but just about anywhere is the perfect site for somebody’s project. What matters are the details about the specific site and project.

Methodology for 2019 Top States for Doing Business

Our 2019 Top States for Doing Business rankings reflect the results of our recent survey asking the consultants to give us their top state picks in 12 categories that impact companies’ location and facility plans. The states in each category were ranked based on their number of mentions in the particular category, and total mentions in all 12 categories were calculated to rank the top 20 states overall.

Overall Cost of Doing Business
Face it, a site simply won’t be viable if the business can’t make money while operating there. Overall cost of doing business is an essential location factor, and most of the other categories below have some impact on the overall cost of doing business.

Tennessee and Texas trade places this year, with Tennessee atop the list and Texas in second place. For Tennessee, this factor shines with the help of its low tax burden, its right-to-work status, its reasonable tort and workers’ comp laws, and its overall reputation for fiscal responsibility. Texas boasts of a giant and strong economy, and some of the factors that help keep business costs low are its lack of corporate and personal income taxes, its generous menu of tax relief, powerful business incentives, and a legal system that treats businesses fairly.

Once again, Georgia and Alabama land in a tie for third, this year joined in the tie by South Carolina. And another trend that carries over this year — the entire top 10 in this category is made up of Southern States, with Indiana the only exception to that rule.

Corporate Tax Environment
As the Tax Foundation points out, the impact of taxation has to do with both what kinds of taxes are present and how high they are. Many states that are attractive from a tax perspective get that reputation because a particular kind of tax is absent altogether. Others fare well because of the low rates they levy. One example that the Tax Foundation cites: Indiana levies taxes in all of the major areas, but does so at low enough rates that its overall tax climate is favorable. It places seventh on our list for best corporate tax environment.

No. 1 in this category, Texas, meanwhile, gets a good jump out of the starting gate by having no corporate or personal income tax at all. It adds to that feather-in-the-cap with an ever-present knife for further tax cutting. In recent years, there have been reductions in the franchise tax and property taxes.

Second-place North Carolina, on the other hand, does have a corporate income tax, but that tax is seen as among the nation’s most competitive, behind only Wyoming and eighth-ranked South Dakota (which the Tax Foundation places third on its index of State Business Tax Climate).

Georgia, tied for third on the Area Development list in this category, also is recognized with a low corporate tax rate, along with generous credits that reward businesses that are growing and adding jobs. Also in third is Florida, which can boast of a long list of taxes that it doesn’t levy, including state personal income tax as well as corporate tax on certain kinds of corporations.

Business Incentives Programs
A regular leader in this area is the state of South Carolina, which ranked first for its business incentives programs. The state has enacted a host of performance-based tax incentives that pay off for companies that create jobs and invest in their operations. There are ways to totally wipe out the corporate income tax liability, plus sales tax exemptions reducing startup and operating costs, individualized property tax incentives, and other discretionary incentives. On top of that are education and training programs.

In Georgia, the incentive picture includes both tax credits that can reduce corporate income taxes and payroll withholding, plus tax exemptions on sales and use taxes as well as inventory taxes in some situations. A major incentive here, as well, is one of the nation’s most robust training programs (more on that later in this article).

Tied for second place with Georgia is Tennessee. Its incentives programs include grant funding tied to economic development, job training assistance, and infrastructure grants. How much of these things each company can receive is determined by the amount of the investment, the number of new jobs, and how much those jobs pay.

Access to Capital and Project Funding

An economic development project won’t get far without funding, and money doesn’t grow on trees. But it turns out, there are places where capital does seem to sprout in a pretty healthy way. California and New York top this list again for 2019, as they did last year.

Indeed, PwC MoneyTree research into the hottest investment activity this year shows a huge volume of activity in California. Three of the top five metro areas for raising capital are in California, while New York and Boston are high on the list, too. Needless to say, all are hotbeds of innovation, and money tends to follow hot ideas.

Beyond those two, the vibrant business climates in Georgia and Texas make obtaining project funding comparatively smooth. States like these attract the attention of deep-pocketed investors, of course, but these states and their communities also do their own investing in a variety of business funding programs that help smaller companies and those that aren’t as easily connected with traditional funding.

The city of Atlanta, for example, promises a host of programs for businesses of all sizes.

Competitive Labor Environment
Our overall top-ranked state, Georgia, is tops when it comes to a competitive labor environment. A number of things make it that way. The population trends a bit younger than the national average, and Georgia is a draw for talent (for 2017/18 is was ninth in the nation for net migration). Atlanta is among the five most attractive cities for millennials, in fact. The state’s educational institutions turn out a remarkable number of eager graduates every year, and the specific needs of any given location or expansion project are the top priority of Georgia Quick Start, the oldest program of its kind in the country. It provides free, customized training for companies and the people they want to hire — and its expertise has boosted the careers of more than a million people through the years.

Texas, last year’s leader in this category, ranks second this time. To begin with, it has a huge labor pool, second in the nation. It also has a vast educational system constantly turning out new members of the labor force, and its development fund supports customized job training.

Tied for third is Tennessee, which has earned headlines in recent years for its investments in the workforce (its audacious goal is to put certificates or college degrees in the hands of 55 percent of Tennesseans within the next few years, and generous tuition programs put that dream within reach of anyone in the state). Also in third in this category is North Carolina, which has been ranked first for its manufacturing sector, and has top-notch universities, a community college system with 58 campuses, and more than 22,000 STEM degrees awarded every year. Among other things the top 10 states on this list have in common — all but one (Ohio) are right-to-work states.

Shovel-Ready Sites Program
Getting a new development up and running is often a slow and complicated matter, but the needs of business these days evolve and change more quickly than ever. It can sure help matters if a site is ready to roll ASAP. That’s why so many states pay a lot of attention to building a list of shovel-ready sites.

Such programs go by a variety of names — many are “certified” or “shovel-ready” or “ready” in some other way. Ranked first, Tennessee offers a roster of “certified sites” all over the state, from 20 acres to hundreds. Georgia’s “certified sites” are part of its Georgia Ready for Accelerated Development program, which ensures that there’s already been plenty of due diligence done in such areas as environmental and geotechnical assessment, investigations into endangered species, wetlands and utility services, and other pertinent topics. Kentucky calls its sites “Build-Ready,” and you’ll find plenty of “Business Ready” sites in Virginia, and in Ohio they’re “Job Ready.”

Cooperative and Responsive State Government
To be sure, there’s not a state government that would turn down a phone call from a potential employer looking for a good place to land. Every state government is eager to promote job growth and will cooperate to the best of its ability. But being truly responsive goes beyond having a helpful attitude — it takes very intentional process-building and red-tape cutting. Those that put in the effort ultimately build a solid reputation in this area.

Tennessee and Georgia top the list this year (a tie). Both have strong programs in place to support the various needs of businesses considering locating in their states, as well as those already operating there and striving to succeed. The work begins from the start of a prospect’s interest, with assistance locating an ideal place, making local connections, securing approvals, and building customized incentive packages and training programs.

Different states achieve these aims in different ways that reflect both their philosophies and the characteristics of the state. Georgia, for example, last year created a division with a specific focus on helping rural communities promote development projects. And it puts the Technical College System of Georgia in charge of customized training, through its Georgia Quick Start program. Arkansas, one of the states tied for seventh place in this category, stresses its single point of contact to make the process as easy as possible and its philosophy of seeking and removing burdens and hurdles from the path.

Favorable General Regulatory Environment
A favorable regulatory environment is, in a sense, part of the overall cooperative and responsive climate discussed above, though the regulatory world is often at least partly beyond the purview of state government. Multiple parties have a hand in painting this picture, including environmental regulators, workplace safety and workers’ compensation authorities, zoning officials, and others. There are plenty of places red tape can slow or stall a project, meaning that there are lots of places for states to differentiate themselves.

In Alabama (ranked first in this category), for example, the state’s Department of Environmental Management says its “one-stop permitting” is facilitated by a Permit Coordination and Development Center. That gets one hurdle out of the way in as simple a fashion as possible. North Carolina has also streamlined practices, pursued tort reforms, and made sure its business courts and litigation don’t stand in the way of progress.

Speed of Permitting
This category, in turn, is a subset of the favorable regulatory climate. Businesses don’t want undue regulatory burdens to cloud their success, but quite frankly, the speed at which permitting happens is nearly as important as the potential height of any hurdle. They’re ready to jump, but they want to jump quickly.

One key in this area is simply making it easy to get in contact with a human being who can help. For example, Tennessee’s Department of Environment and Conservation operates field offices across the state staffed with technical experts who can help with permitting needs. North Carolina recognizes that there are many different ways a company will need licensure or permitting, depending on the nature of the business, so it pulls the information together to provide guidance and help expedite the process. And as mentioned above, Alabama tries to create a one-stop service in an effort to be as speedy and hassle-free as possible.

Favorable Utility Rates
How big a deal-maker or deal-breaker is the cost of utilities? It depends, of course, what activities are planned. Data centers have a big appetite for energy, as do numerous other sectors, such as chemicals and petrochemicals, steel manufacturing, paper mills, and other wood products. Big water users include manufacturers of textiles, paper and paint, among others.

Determining which jurisdictions are most favorable with regard to utility rates is not an open-and-shut case, though, because big users are often able to get their own special deals and incentives. That said, our consultants named some of the best bets for energy as Tennessee, Georgia, South Carolina, and Washington. The U.S. Energy Information Administration keeps its own tally, and while its state rankings reveal residential rates rather than commercial or industrial, they’re a good yardstick to start with. Indeed, all of the top 10 states on our list for favorable utility rates do quite well on the EIA list — in fact, Washington State is best on its ranking, and Idaho is not far off the pace.

Water rates can vary even more dramatically than electric rates, according to research from the U.S. Department of Energy, and some of the places with the lowest electric rates may simultaneously have high water rates. Again, how much that matters depends on the facility use.

Leading Workforce Development Programs
This pretty much sums up the biggest issue keeping executives and site consultants up at night as they plan for a new location or expansion: “A main concern, the X factor, is the human factor, the workers. Are they going to be available? Are they skilled? What’s their work ethic?” That’s Rodger Brown speaking, the executive director of Marketing and Strategic Media for Georgia Quick Start. As the economic development arm of the Technical College System of Georgia, the Georgia Quick Start program is exactly what its name suggests — a fast jump toward success, from the perspective of a well-prepared workforce.

Georgia Quick Start has been in this business for more than five decades and, says Brown, “We have teams with decades of experience in a wide range of industry types.” The organization points out that it has trained workers in everything from making doughnuts to building cars. Its efforts have put a winning edge on thousands of projects and earned Georgia top ranking in this category.

In South Carolina, the ReadySC program is part of the South Carolina Technical College System, and it has trained about 300,000 people since the early 1960s. It focuses on customized recruiting and training for companies locating or expanding in the Palmetto State, which lands second on this list. Louisiana places third with a strong commitment toward helping both businesses and job-seekers make connections and, as needed, arrange the training necessary to succeed through its LED FastStart program.

Most Improved Economic Development Policies
Finally, the best businesses know that they can’t stand still; they must always be working toward improving. That philosophy rings true in state economic development policies, too. The environment is super-competitive, which makes staying ahead an ongoing challenge.

Improvements in the economic-development climate can take many forms. States are often seeking ways to lower the tax burden, for example, as in North Carolina…or build upon infrastructure, such as in Arizona…or focus on specific economic development challenges, such as rural development in Georgia or Tennessee…or to streamline regulatory processes or upgrade training programs.

Indeed, progress is a moving target, and the most successful states are keeping their eyes on that target.

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