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GOVERNOR GREG ABBOTT

November 6, 2017

The Honorable Byron Cook

Chairman
House Select Committee on Economic Competitiveness
Texas House of Representatives
P.O. Box 2910
Austin. Texas 78768

Dear Chairman Cook:

One of the paramount goals for all elected officials in Texas should be to ensure that our state
improves its status as the best place in America to grow a business and raise a family. As the
House Select Committee on Economic Competitiveness deliberates, you and your colleagues
should seek to build upon many of the economic accomplishments of the past two sessions

significant franchise tax and property tax cuts, statewide transportation infrastructure investment
and transportation network company reform, and eliminating occupational licensing fees for over
haifa million Texans just to name a few. I write to extend the support of my office to policy
principles that will ensure the next generation of Texans enjoy the same economic vibrancy that
we are currently experiencing in this great state.

As you know, the states economy is thriving. Recently, Texas unemployment rate dropped to 4
percent, which is the lowest level in the last 40 years. For the past 13 years, CEOs from around
the United States have been surveyed by Chief Executive magazine, naming Texas the Best
State for Business. Texas has also remained the top exporting state for the past 15 years and the
nations leader in technology exports for the last four years.

The accolades dont stop there. CNBC not only ranked Texas as the Top State for Business
over the last decade, but it also ranked Texas No. 1 in the nation for both workforce and
infrastructure earlier this year. Additionally, Area Development magazine ranked Texas No. 1 in
Overall Cost of Doing Business, Corporate Tax Environment, Favorable Regulatory
Environment and Competitive Labor Environment. Furthermore, for the fifth year in a row,
Texas has been the winner of Site Selection magazines prestigious Governors Cup, reporting
more than 600 high-capital investment projects completed 1112016. With a $1.6 trillion
economy, the 1 0th largest in the world, Texas will continue to lead the United States in job

POST OFFICE Box 12428 AuSTIN, TExAs 78711 512-463-2000 (VoICE) DIAL 7-1-1 FoR RELAY SERvICEs
The Honorable Byron Cook
November 6, 2017
Page 2

creation and investment. As great as these rankings and economic statistics are, at the end of the
day Texans care about jobs and the businesses that create them. In that regard, Texas continues
to thrive across a diversity of business sectors and regions of our state. NTT Data, Inc., a top 20
global business and IT service provider, has announced plans to grow its Piano headquarters by
more than 6,300 people, while financial services giant Charles Schwab & Co. recently broke
ground on a new $100 million campus that will house more than 2,600 new jobs in Westlake.
The TJX Companies will be establishing a $130 million warehouse and distribution center in San
Antonio, creating 1,000 new jobs. Charter Communications has announced its plans to locate a
new call center in McAllen that will employ at least 700 people. Leading global
biopharmaceutical company Merck & Co. will be locating its newest IT Hub in Austin, creating
at least 600 new jobs.

Companies continue to see the benefits of moving their operations to Texas. Headcluarters
relocations announced over the past few years include Kubota Tractor Corporation, Jacobs
Engineering Group, Mitsubishi Heavy Industries, Pei Wei Asian Diner, Farmer Brothers Co.,
Lone Wolf Real Estate Technologies, Jamba Juice, OKI Data Americas, Serenova and Spirit
Realty Capital. Relocations of other types of operations also continue, with Hudson Products
Holdings moving its manufacturing from Oklahoma to its headquarters in Fort Bend County.

In the weeks since Hurricane Harvey, these trends continue. Amazon launched its largest wind
farm, which will bring one million megawatt hours of energy to the grid each year, while Ashley
Furniture just broke ground on a $65 million, 850,000 square-foot regional distribution and
fulfillment center in Mesquite that will employ more than 350 Texans.

In the next year, Texas can look forward to welcoming the NCAA basketball tournament to sites
in both Dallas and San Antonio, while football fans prepare for what promises to be a historic
NFL draft in Arlington. Further down the road, Houston will be the host of the 2020 World
Petroleum Congress, which has not been held in the United States since it was last hosted by
Houston in 1 987. These events will continue to increase our visitation rates from both outside
the state and outside the nation, growing at 68 percent and 87 percent respectively since 2009.

These accomplishments are not accidents. Texas has conscientiously adopted pro-growth
policies. For these results to continue, however, our state must remain true to the basic economic
principles that guide long-term economic growth: creating an educated, agile workforce and
maintaining a free and competitive marketplace for businesses. The Legislature can play a role
in fostering long-term competitiveness with a forward-looking educational policy that nurtures
and creates workers equipped to handle and adapt to our rapidly changing economy. Just as
important, the Legislature must continue to remove regulatory barriers and taxes that depress
wages, restrict economic opportunity, undermine workforce development, keep labor
participation rates low, and inhibit start-ups, expansions and relocations.

As the committee considers those principles that will best guide economic freedom and the
workforce needs of tomorrow, it should consider the following ideas:
The Honorable Byron Cook
November 6, 2017
Page 3

1. Reform Property Taxation: Texas must address the heavy burden our current property
tax places on job creators and the households that purchase goods and services.
Property tax changes that empower home ownership and capital investment should take
precedence over budgets of taxing entities.

2. Eliminate the Franchise Tax: This committee should recommend eliminating this
maligned tax once and for all, and make clear to the business community that it will not
be replaced by any other tax.

3. Recruit, Support and Retain Teachers and Principals: Investing in the highest quality
teachers and principals, and creating a career path that rewards excellence, will benefit
generations of students as they explore college and career options.

4. Promote K-12 Innovation: Build upon the districts of innovation structure, exemplary
public charter school proliferation and campus level ratings, while putting an intense
focus on mastery of math and reading by 5th grade, to ensure that Texas students are
actually career and college ready by the time they receive a high school diploma.

5. Align Higher Education With 60x30 Goals: The states long-term strategic plan for
higher education 6Ox3OTX has set a goal that 60 percent of Texas 25- to 34-year-
old workforce achieves a postsecondary education credential by the year 2030.
Promoting quality, completion, affordability and cost efficiency in higher education will
promote achievement, career success and lifelong earnings.

6. Transition Our Military: Continued implementation of Operation Welcome Home, a

program launched by the Governors Tn-Agency Workforce Commission, will ensure
integration of those veterans leaving active duty into the Texas workforce in jobs that
match their skills with the demands of Texas employers.

7. Pursue Broad Regulatory Reform: The state should comprehensively review outdated
and unnecessary regulations from years past at the state and local level. There are
simply too many obstacles to obtaining legal authorization to operate a business and
engage in an occupation, and it takes too long to be granted authorization.

8. Eliminate Barriers to Work: Burdensome occupational licensing regimes often serve to

distort the free market flow of labor and artificially decrease competition. In most cases,
Texans should be free to pursue the occupation of their choice without needing
permission from the government. Put simply: licenses are state-imposed barriers to
work.

While the workforce of tomorrow will likely shape much of your discussion, the committee
should also strive to balance the limited role of government in a free market system. Texas
The Honorable Byron Cook
November 6, 2017
Page 4

economic development programs must be guided by principles that promote accountability,

transparency and a taxpayer-focused return on investment. After significant legislative reforms
in 2015, the Texas Enterprise Fund has become a prime example of how to achieve these
priorities. While no economic development program will ever be a replacement for free market
principles, the Enterprise Fund compares favorably to the states other economic development
programs and should be considered a model for creating more jobs for less money with greater
accountability.

The stated mission of your committee also warns of forces that, if left unchecked, could derail
our states success. Perhaps no risk is greater than a deviation from those free market principles
that foster competition and spur innovation. To that end, Texas should not follow states like
Connecticut or similar Obama-era policies that provide govermnent handouts for companies
simply to stick around under the guise of job retention. Such policies only serve to award
taxpayer dollars to politically well-connected businesses for actions they would have taken
regardless. Likewise, a desire for increased investment capital should not drive the state to re
invent the Emerging Technology Fund, which was appropriately abolished in 2015, or to create a
new alternative.

As you and your colleagues embark on the committees mission, I look forward to your efforts to
expand free market economic principles and prioritize the education and skills development of
our states future workforce. Together, we can ensure that when Texas reaches its bicentennial,
our state will continue to be the best place in America to call home for both businesses and
families.

Sincerely,

Greg Abbott
Governor

Enclosure
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Date Announced TEF Grantee Location Amount Jobs Capital Investment

May-15 Kubota Tractor Corporation Grapevine $ 3,800,000 344 $ 57,000,000
June-15 Gestamp Steel US Inc. Amarillo $ 1,800,000 339 $ 143,000,000
July-15 Serenova, LLC ffka LiveOps, Inc.) Cedar Park $ 1,200,000 155 $ 5,000,000
December-15 GM Financial San Antonio $ 2,500,000 490 $ 20,000,000
January-16 CGT U.S. Limited New Braunfeis $ 2,000,000 275 $ 81,000,000
March-16 McKesson Corporation Irving $ 9,750,000 975 $ 157,000,000
March-16 Galderma Laboratories, L.P. Fort Worth $ 2,052,000 342 $ 22,000,000
April-16 Thomson Reuters Carrollton $ 1,538,000 250 $ 6,154,889
May-16 Sata S.P.A. Brownsville $ 1,800,000 300 $ 114,000,000
May-16 Jamba, Inc. Frisco $ 800,000 126 $ 2,000,000
June-16 W.W. Grainger, Inc. San Antonio $ 975,000 178 $ 3,900,000
August-16 Charles Schwab & Co., Inc. Westlake $ 6,000,000 1,200 $ 100,000,000
September-16 Sabre GLBL Inc. Westlake $ 5,000,000 500 $ 37,900,000
October-16 OKI Data Americas, Inc. Irving $ 895,000 104 $ 3,580,000
October-16 Jacobs Engineering Group Inc. Dallas $ 1,332,000 111 $ 4,000,000
April-17 Hulu, LLC San Antonio $ 1,284,000 214 $ 13,660,000
April-17 Lone Wolf Real Estate Technology, Inc. Dallas $ 862,500 150 $ 3,450,000
April-17 ExxonMobil* San Patricio County $ 5,000,000 500 $ 4,748,750,000
April-17 SABIC US Projects, LLC* San Patricio County $ 1,350,000 135 $ 4,748,750,000
May-17 Ryder Integrated Logistics, Inc. Fort Worth $ 1,050,000 205 $ 5,266,000
May-17 Hudson Products Holdings, Inc. Beasley $ 1,020,000 150 $ 6,057,871
June-17 NTT Data, Inc. Piano $ 7,500,000 6,377 $ 28,800,000
July-17 Merck & Co., Inc. Austin $ 6,000,000 600 $ 28,722,000
August-17 Pei Wei Asian Diner, LLC Irving $ 780,000 100 $ 1,500,000
September-17 Brakebush Brothers, Inc.* Greenville $ 780,000 104 $ 95,840,000
Total $ 67,068,500 14,224 $ 10,437,330,760
*
Announced with contract pending