Texas Governor Perry’s week-long business-recruiting tour of California in February has the Silicon Valley worried that Texas will continue to siphon off more and more companies — biotech and beyond.
San Jose and San Francisco have for years competed against one another in California in attracting and retaining top tech companies in the Silicon Valley. However, given the recent decline in economic growth and rise in tough regulations and corporate taxes in California, an increasing number of tech companies are leaving the state for Texas in a new kind of gold rush, where the private sector is seeking out low tax rates, lucrative grants, and reasonable regulations. The result is a palpable fear of the exodus of Silicon Valley businesses into Texas, as reported by the Oakland Tribune:
Added San Jose Mayor Chuck Reed, whose city long has billed itself as Silicon Valley’s capital: “I’m worried about Texas,” not San Francisco. “We’ve got much bigger competition for companies that are expanding to other states and countries instead of keeping their growth in Silicon Valley.”
That’s a strikingly candid and eyebrow-raising quote from the mayor of a major economic metropolis for the state of California, and an obvious reaction to Governor Perry’s insurgent prospecting tour of the state back in February, where he audaciously panned California’s recent passing of higher tax burdens and regulations for businesses that make it increasingly difficult for them to remain profitable. Simply put, the benefits of having a business headquartered in California — or even the Silicon Valley, for that matter — may have been eclipsed by the drastic measures that Sacramento is taking to try and stave off fiscal disaster for a state that accounts for the 7th largest economy in the world.
While California continues to shed jobs and companies, Texas continues to rack up accolades for its optimal business conditions — and attract massive corporations in the process. Yesterday, BioNews Texas covered two stories that relate to the Lone Star State’s short-term success in attracting new biotech business: the recent earnings report from Medical Device leader Greatbatch, who relocated to Frisco, Texas last year, as well as Silicon Valley venture capitalist Mir Imran’s InCell Labs project to develop San Antonio into a biotech mecca. An article on the “Best Cities For Small Business” on NuWire Investor yesterday named San Antonio as the #1 place to start a small business even pointed out the city’s strength in biotech:
Startups are also launching within the biotech and medical device industry, particularly with unique assets to the city like University of Texas’ Health Science Center and several biotech incubators, such as T3DC, that all lend themselves to fostering small business creations, Dominguez says.
There’s no doubt that the economic policies of California and Texas respectively are having a tremendous impact both states’ economies and economic growth forecasts. Pundits and politicians like to remind voters that elections have consequences. They do — as do corporate tax policies, state-funded grants, regulations, and cost of living. The preponderance of evidence suggests that, as California reels from its recent economic policies, companies will continue to flock to Texas, which has shown a willingness to put tax dollars to work in growing its private sector.