The nation's chief executive officers — CEO decision makers who say where and when to relocate and how much to expand — just elevated Florida to the third-best state for business in America, on the heels of No. 2 North Carolina and No. 1 Texas.
"Florida's basically running parallel with North Carolina and Texas in the top tier," says J.P. Donlon, editor in chief of Chief Executive magazine, which polls hundreds of CEOs across the country every year to determine the pecking order of states good, bad and ugly for business.
Florida ranked No. 6 in 2010, having fallen from No. 3 in 2009. It has now regained the No. 3 spot, leapfrogging Tennessee, Virginia and Nevada ,which fell to Nos. 4, 7 and 10, respectively. Poll results were published in the magazine and online (www.chiefexecutive.net) last week.
But the poll also exposed Florida's major Achilles' heel: a persistent perception in the nation's business community that this state has mediocre public schools.
How timely. The poll results came out in the same week that the Legislature approved budget cuts forcing further severe trims to Florida's already-challenged K-12 budget.
In Pinellas County alone, budget cuts will force schools to not renew annual contracts to 1,100 first- and second-year teachers. As many as 1,200 Pasco County teachers are expected to get pink slips this week. And while Hillsborough County hopes to avoid teacher cuts, it expects noncore classes to balloon in size.
If Tallahassee has turned a blind eye to public education, it is also clear the nation's CEOs, those the state wants to woo here, have not.
CEOs pondering where best to expand want three things: first, low taxes and minimal regulation; second, a good quality of life for themselves and employees; and third, good schools, so that they can recruit smart workers with families and then hire sharp, young people locally.
Florida's dangerously close to becoming the Two-Legged Stool State in the eyes of CEOs.
"If I were a state bidding against Florida," says Donlon, "I would say our high school graduates are better educated.
"CEOs like almost everything else about Florida, but education is a relative weakness, and they would like to see improvement."
No question, the elevation of Florida so high in the Chief Executive poll is good news. It means the state is now even more attractive to Corporate America's elite. That should position the Sunshine State all the better for recovery in unsettled times.
At first glance, the poll should cheer Florida Gov. Rick Scott. His singular mandate is to create jobs by cutting Florida's taxes and regulations and to make the state irresistible to companies (especially those in the "worst states" for business like California, New York and Illinois) contemplating relocation or expansion.
The Chief Executive poll was conducted in January, which might seem to not take into account what has happened since. Not so, suggests Donlon. If Scott was campaigning last year with that pro-business message, it's likely CEOs would be giving the new governor the benefit of the doubt, even in the January poll numbers.
But here's the trick: If Florida is already No. 3 among the best states in which to do business, how much more can it improve its appeal by cutting taxes, rules and bureaucracy?
Late last week, as the state Legislature prepared to finish its work for the 2011 session, budget-strapped lawmakers agreed to modest tax cuts for businesses.
Corporate tax cuts were a priority for Scott, who wanted to phase out the current 5.5 percent levy, cut it to 3 percent next year and by half a percentage point each year thereafter. That bill would have cut corporate taxes by $333 million in the first year.
In its place, corporations will pay no taxes on their first $25,000 in net income, up from $5,000 under current law. That will result in a $1,100 tax cut per corporation. About 15,000 small businesses will no longer have to pay any state income taxes.
At Chief Executive, editor Donlon is a fan of lower business taxes. But he wonders if incremental reductions will produce much more economic bang for the (reduced) buck.
"When it takes more and more heat to increase the temperature 1 degree, it gets harder to get improvements," he said. "If your state is No. 3 or No. 1, at that level it does not make much difference."
Donlon's national perspective can help Florida get a better look at itself through the eyes of CEOs.
The good news is that Florida is so well regarded overall. To CEOs, some states are sinking like the Titanic. Illinois ranked No. 8 in 2006 but fell a whopping 40 spots to rank No. 48 in this year's poll. Ohio, No. 22 in 2006, now ranks No. 41.
Conversely, Donlon says other states are rising fast. Oklahoma ranked No. 31 in 2006 and is up 20 spots to No. 11 this year. A Donlon favorite, Louisiana, was in the CEO doghouse at No. 46 in 2006 but has risen to No. 27.
Louisiana, Donlon says, is a top 10 contender because it has dissected the success story in No. 1 Texas and — here is a message so important to Florida — is out selling itself to companies in other states.
Texas and Nevada are so organized that they send teams to visit businesses in communities in California and ask: Are you fed up? Then come here.
What about Florida? Isn't this No. 3 state out there pitching its business virtues? Donlon says he's not hearing that yet.
Maybe our salesmanship could use a little work. If we are No. 3, maybe we should shout about it. Maybe we should have our own roving sales teams knocking on doors in those "worst for business" states.
Donlon raises one more issue: Some states, he says, radiate a certain collegiality that businesses can find very appealing. Indiana, for example, touts its quality public schools. But in addition, he says, "companies in Indiana feel strongly about being in Indiana." Texas also has a "sense of being in Texas" that appeals to many businesses. So does Illinois, he says, despite the state's overall low ranking.
Donlon's less sure of Florida's business culture. "Do companies feel that sense of community, that they are all in this together?" It's a great question for a state built so much on transplants from afar.
Sounds like the Two-Legged Stool State's got great potential but some more work to do.
Robert Trigaux can be reached at email@example.com.