Texas Gov. Abbott: ‘The Proof Is In The Pudding’

The chief executive of the No. 1 state for business explains how it keeps attracting CEOs despite recent challenges.

Texas shines once again with the most appealing business climate of any state in the new Chief Executive rankings of “Best and Worst States for Business.” But this year is different from any of the previous 16 in which the Lone Star State has headed our rankings, because Texas has undergone unprecedented adversity lately.

Yet the legendary positivity and even bravado of Texans has persisted through a year that began with Covid, walloped the state’s crucial oil and gas industry, saw massive new immigration challenges beginning in January and then, in February, brutalized the state with a once-in-a-century winter storm that knocked out much of the power grid for a frightening couple of days.

Governor Greg Abbott, a Republican who has been in office since 2015, led through those circumstances and has been shepherding the state’s recovery, standing out in part by maintaining one of America’s most open attitudes about shutdowns and mask mandates amid the pandemic.

Chief Executive talked with Governor Abbott a few weeks ago. A transcript follows, edited for clarity.

The last time we interviewed you was a couple of years ago. Happier times, as we say. What’s changed about the Texas business economy since then? And why do businesses continue to invest in Texas at the pace they have been?

Even during times of Covid, the Texas business economy has improved even more over the past couple of years. The proof is in the pudding. If you look at the economic challenges that existed across the globe in the year 2020, it was a time when businesses had to make decisions not just for next year but for the next decade or two.

During 2020, businesses made the decision to relocate to Texas because of the business environment. The reasons for that are multifold. One is because of our tax policies; another is our regulatory policies. But it’s also because of investments that we’re making in education, in infrastructure. And there’s also something amazingly simple:  We reach out to and seek to partner with businesses and support them not just in the process of getting them to come to Texas but also supporting them once they arrive in Texas.

We view them with great hospitality – which, candidly, is in contrast to the governments of states they’re fleeing from.

Yet it’s all still about talent, right? Texas has been able to answer that challenge very well. How do you continue to satisfy the talent equation for business?

It’s one of our foremost focal points. We collaborate with the large number of top-tier universities that we have … and work to ensure that they’re offering the types of programs that provide graduates that assist the business strategies of the multiple different types of businesses coming here.

For example, the [U.S.] Army Futures Command a couple of years ago moved their operations to Austin, where they’re redesigning what the future of the U.S. Army will look like for the next 40 years, involving AI, cyber technology and robotics. They wanted to be one mile away from the University of Texas campus, and they’re already partnering with multiple engineering programs there.

Similarly, San Antonio is a premier location for cybersecurity, including UT-San Antonio as well as the private sector. Within a 200-mile radius there is also UT and Texas A&M and also Rice University and multiple UT-system schools, Baylor, SMU and Texas Christian. That’s a large talent pool available from top-tier universities.

In addition, because Texas is such an attractive place for people to live, it’s easy to recruit talent here from other regions of the country.

Rivals would say you’re dealing with three whammies at once: the power grid problem, changes in immigration, and the federal government’s planned long-term undermining of the oil and gas economy. How is each of those going to affect the attraction of doing business in Texas? 

Those things aren’t going to affect our standing at all, and I can tell you why.

With regard to the storm, people know one-off events occur, and what matters most is what our response is. Texas is responding very aggressively and strongly and will ensure a stable power-grid system that will be the most robust in the United States in electricity production. But it’ll be even [more so] after we finish our legislative session that ends in May. It’ll send a strong message to America that, whatever challenges we’re faced with, Texas has the ability to overcome those challenges with responses that make state even better.

As far as the future of energy is concerned, Texas is the national leader in production and [distribution] of oil and gas, and also the national leader in wind. Either this year or next year, we’ll become the national leader in solar. And all of that continues moving forward. That will help keep us the top energy state, and much of the transformation is being led by some traditional energy companies that are transforming their portfolios, knowing that fossil fuels will be required for years to come – but also alternatives. That also doesn’t even include the plans by Tesla to build an EV-truck plant in Texas.

And in regard to immigration: That is nothing new. For two decades, there have been ebbs and flows. It is something that affects the entire nation. Congress and the [Biden] administration hopefully will be looking for solutions.

With all of the California tech companies relocating now to Austin, are you concerned about the start of a change in business culture in the capital and  maybe elsewhere in Texas – or that, politically speaking, this is the start of Texas “turning blue” or at least purple?

I’ve been visiting with most of the business leaders moving to Austin. They’re true-blue conservatives or even libertarians. One reason they fled California is that they disdained the policies in California.

Just over two years ago, in the biggest election in Texas with a national profile, [U.S. Senator Ted Cruz, a Republican, ran against Democrat Beto O’Rourke and defeated him.] My campaign did an exit poll; so did national media outlets, and they came up with the exact same result. The polls asked, “Have you moved to Texas from California or are you a native-born Texan?” The results were eye-opening. Cruz received 57 percent of the votes of people who’d moved from California. So there may be some people moving from California to Texas who are liberal, but most are conservative.

Texas is importing California conservatives, and California is importing Texas liberals. There’s more mathematical proof for that. In the 2020 elections, Democrats in the state and nationally banked on Texas turning blue because of all the people moving into Texas. [Democrats and allies] spent more than $100 million on Texas legislative races, thinking they could pick up the Texas House for redistricting.

But all that money just evaporated. Democrats made zero gains in the Texas House and congressional delegation, and Texas remained Republican. And the margins of victory in the closest districts were wider this time than the years before. Even with the massive voter turnout, [then-President Donald Trump] got a million more votes than four years earlier.