Arizona wants California’s tax refugees. So does Rick Perry. Could this mean war?
Barry Broome likes Texas, but he likes Arizona better. In fact, the head of the Greater Phoenix Economic Council (GPEC) has made a detailed study of Arizona outperforming the Lone Star state, from primary education in Chandler (“...one-fifth the size of Austin, but it has more high-performance schools...”) to our bigger “entrepreneurial engine.”
Broome is especially fond of comparing the two states’ respective capitals: Austin and Phoenix. Is he impressed by the former’s thriving music and arts scene? Not overly. “Sure, Austin’s the coolest town in Texas,” he concedes. “But what is that saying?”
The veteran economic developer is plainly itching to pick a fight with our larger, more drawl-y neighbor, and for good reason: If you believe the pundits, including Forbes, Fox News and golfer Phil Mickelson, California job creators are about to stage a mass exodus as a result of the state’s recent Prop 30 income-tax hike, which pings top earners with a 29 percent increase. Viewed as the most opportune havens for fleeing tax refugees, Arizona and Texas are pulling out all the stops to court Californians, from radio ads to free travel to pointed verbal sparring.
In many ways, Texas and Arizona are naturally allies – or rivals. Both are conservative, regulation-averse border states with a tradition of mainstream-bucking politics. We have similar climates and probably about the same number of gun shows. Maybe that’s why we tend to tangle. Remember the Alamo? Arizonans prefer to remember Robert Horry’s series-swinging hip-check of Steve Nash during the 2007 NBA Western Conference Semifinals, or the besmirching of Senator John McCain by operatives of George W. Bush during the 2000 Republican presidential primary.
What Texas doesn’t have is our PR problem. While Arizona fought rampant unemployment and home foreclosures during the recession, compounded by the SB 1070 brouhaha, Texas survived the ordeal relatively unscathed. The state’s 2.4 percent gross domestic product growth in 2011 was almost a full point higher than the national average, and Texas replaced all 427,600 jobs lost during the recession by December 2011, according to the Texas comptroller’s office – although, as many critics noted, those jobs are disproportionally minimum-wage positions.
No matter – the Texas economic “miracle” is now a matter of record, fueling media honorifics like Chief Executive magazine’s “Best State for Business” title, which Texas has won eight years running.
“Low taxes and predictable regulations with fair courts and a skilled workforce,” Texas spokesperson Lucy Nashed says, reciting the substance of a pitch that Governor Rick Perry delivered to California business leaders during a tour of the state last February. Texas also spent $24,000 on radio advertising in California to trumpet the leave-California effort.
Not to be outdone, Broome launched a slick media blitz of his own, offering California’s top 100 CEOs an all-expenses-paid trip to Phoenix to assess the business climate. Arizona also has an office in San Diego operated by the Arizona Commerce Authority, the semi-privatized facilitator that replaced the old Department of Commerce in 2011.
Though he concedes that Texas “has a terrific brand and reputation,” Broome gives no quarter to our cow-country cousins. While Texas has no state income tax, it does have robust franchise and inventory taxes, he says. He also touts Arizona’s closer proximity to California. “Moving a company is a process of energy and time,” he says. “You can’t just load 10,000 people into a U-Haul. So in terms of transition, the Valley offers a much better logistical relationship [than Texas].”
Nashed has a rejoinder for that. “For CEOs, the bottom line is the biggest factor. The results they see. They’re looking for... the total package.” Broome counters with the Valley’s “higher rate of talent,” including production of bachelor’s degrees. Nashed deflects by reminding us that “Texas is the number one exporting state.” And so on.
It should be noted that the current Arizona vs. Texas tug-of-war has yet to result in any high profile California defections, though Broome says 31 of his CEO invitees – whose names he declined to disclose – took him up on the Phoenix meet-and-greet.
And he’s not convinced that Governor Perry’s trip to California will tip the balance. “He’s a nice-looking guy and a great salesman. But he didn’t look qualified for president. So... he goes home, and now he’s back to being the smartest guy in the world.”
You hear that, Texas? It’s on.
Alike in Dignity
So who’s winning the all-time Texas vs. AZ battle? A breakdown.
Politics: Bush camp spreads spurious illegitimate-child rumors about McCain’s adoptive daughter. Wins 2000 Republican primary. Advantage: Texas
Sports: The Spurs’ Robert Horry hip-checks Steve Nash. Spurs win 2007 NBA title. Advantage: Texas
Business: Tempe-based US Airways and Dallas-based American Airlines
announce merger. Company will base operations in Dallas. Advantage: Texas
Education: ASU’s National Merit Scholar ranking: 22nd. University of Texas ranking: 45th. Advantage: Arizona
Cost of Living: According to CNN.com’s money calculator, a $50,000 salary in Phoenix is worth $48,031 in Austin. Advantage: Arizona
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