Monday, December 11, 2017
Business

As Gov. Scott direct sells CEOs on Florida economy, eight targeted states fight back

They might as well call him Gov. Poacher.

Eight states are now up in arms over Florida Gov. Rick Scott's "my state's better than yours" playground pitch to recruit their businesses to the Sunshine State. His maverick "One Way" campaign criticizes each of those states — all run by Democratic governors — for their bad business policies. He then directly solicits their business executives in mass mailings to move their companies to Florida's presumably better business climate.

Started earlier this year, the campaign has the targeted states howling "Foul," along with more colorful retorts.

"The way you build a dynamic economy isn't by running around trying to poach other states," sniffs one California economic development spokesman.

Florida is the "most bat-s- - - crazy state in the union," writes Boston magazine in defending Massachusetts from Scott's Aug. 6 letter critical of the tax-heavy New England state.

If you hold to the cynical wisdom that "any publicity is good publicity," then Scott and Florida look smart. It's keeping the governor, who is gearing up for re-election, and Florida's low-tax welcome mat in the news.

Yet the veneer of Florida's current rebound is thin. Its long-term status as a globally competitive state is still up for grabs. Florida's economy fell so hard so fast from 2008 to 2011, it's deceptive to characterize the state's lower taxes and recent upticks in housing prices and jobs as — to quote Scott's letters — "an incredible economic turnaround." The state's 7.1 jobless rate, for example, has not changed in three months.

Scott's claims about Florida's business climate rely, almost painfully, on just one list produced by a magazine with a circulation of just 42,000 called Chief Executive. The list ranks Florida No. 2 behind Texas as the best place to do business. Other lists — and there are many — that are more comprehensive and interview experts other than chief executive officers rank Florida lower.

"We are nipping at the heels of Texas every day," Scott says in his recruiting letters, "as we approach the prized #1 spot." (Curiously, Chief Executive magazine is headquartered in Connecticut, one of Scott's target states. No word if the publication is relocating here.)

Ultimately, Scott's letters may resonate most with small-business owners attracted by Florida's lack of a personal income tax and by other wealth-saving benefits.

All of Scott's pitch letters start this way: "Summer is almost here" — though the latest letter to Kentucky businesses is dated this month — "and millions of people are booking their trips to Florida. This year, we are asking you to make that plane reservation a one way."

Scott sent his "one way" recruitment pitches to eight states: California, Connecticut, Colorado, Illinois, Kentucky, Maryland, Massachusetts and Minnesota. More states are likely targets.

Scott's letters briefly brag about Florida's "turnaround" and then take a poke at a particular business weakness in each state. Three examples:

• Kentucky's lousy corporate tax and personal income tax structure have fed the state's "stagnant" unemployment rate.

• "Not only is the business climate bad," Scott writes to Minnesota businesses, "it looks like it's going to get worse."

• "While Florida ranks fifth in the nation for our business tax climate," Scott tells Massachusetts businesses, "Massachusetts is stuck at #22."

Do the letters work? It's too early to say. Big business states like California and Illinois — tax-laden, union heavy and with jobless rates still significantly higher than Florida's — may be vulnerable to Scott's invitations to relocate.

But liberal-leaning Minnesota boasts a strong business culture and an unemployment rate nearly 2 percentage points lower than Florida's.

In Colorado, Denver Metro Chamber of Commerce CEO Kelly Brough rattles off a burst of state-vs.-state comparisons that make Florida pale. Colorado outshines Florida in per capita high-tech workers, innovation and lower property taxes. And Colorado is tops in the country in high school ACT and SAT scores, she says — something Colorado executives highly value.

"If Gov. Scott has not heard back from our CEOs, these are some of the reasons why," says Brough.

If any state and governor might have a beef with Gov. Scott's strategy, it is New Jersey and Gov. Chris Christie, a prominent Republican with possible presidential aspirations. Already this year, New Jersey-based car rental giant Hertz Global Holdings, No. 293 on the Fortune 500 list of largest U.S. public corporations, said it will relocate its headquarters to southwest Florida.

Fortune 500 headquarters relocations are rare. That's why Scott mentions the Hertz move to Florida in every "one way" letter since that deal was announced in May.

More recently, New Jersey pharmaceutical giant Bristol-Myers Squibb said it will expand to Hillsborough County, cutting jobs up North with plans by 2014 to fill hundreds of high-paying jobs in the Tampa Bay market. The company cited Florida's lower costs as a major factor in its decision.

Scott never sent a "Dear Business Owner" letter to New Jersey, but the message is getting around anyway.

Scott's campaign is not unusual. An analysis of interstate job poaching, titled "The Job-Creation Shell Game," was issued early this year by Good Jobs First, a Washington, D.C., group advocating corporate responsibility in economic development. Florida is just one of many states trying to steal jobs from others, aided by incentive packages and tax rebates to the relocating business.

"What states euphemistically call 'business recruitment' is often nothing more than the pirating of jobs by one state from another," the analysis says. "This piracy is bankrolled by property, sales and income tax breaks, land and infrastructure subsidies, low-interest loans, deal-closing grants, and other subsidies to footloose companies."

In Massachusetts, where businesses are trying to repeal a new computer tax, Scott's "one way" recruiting campaign has hit a particular nerve.

"If I were the governor of Florida, I would be promoting my state to Massachusetts businesses, as well," Christopher R. Anderson, president of the Massachusetts High Technology Council, told the Boston Globe. "Harvard and MIT are not going to get up and move, but high-tech companies have an extremely movable workforce."

In the same story, though, Anderson praises the quality of Massachusetts' highly educated workforce and growing tech clusters. "No one can match Massachusetts' strength in technology," he said. "Florida can't come close."

In the end, our Gov. Poacher's recruiting campaign should persuade at least a few businesses to relocate. But probably not many. After all, Florida still has plenty of its own deep economic potholes to fill.

Contact Robert Trigaux at [email protected]

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