Virginia has regained its status as the best state in the country to do business in the annual CNBC rankings that placed the state No. 1 for the first time in eight years.
The financial news cable network extolled Virginia’s “world-class workforce, high-performing education system and business-friendly regulations” — the same reasons Amazon chose the state for its coveted second headquarters last year after a transcontinental sweepstakes.
“Amazon had it right,” CNBC said in announcing the America’s Top States for Business rankings on Wednesday in an interview with Gov. Ralph Northam at Shenandoah River State Park near Front Royal.
Northam reminded CNBC’s Scott Cohn that the business ranking comes on the 50th anniversary of the “Virginia is for Lovers” tourism slogan, which drew national recognition to the state.
“This is an exciting day for Virginia,” the governor told Cohn.
Virginia was first in the initial CNBC business ranking in 2007, and again in 2009 and 2011 before falling as low as 13th in 2016 after federal budget sequestration underscored the state’s overdependence on defense spending.
“It’s one thing to be Number 4 or Number 7,” Northam said in an interview with the Richmond Times-Dispatch, referring to Virginia’s ranking in the poll the past two years, “but to be Number 1 in the country is something for us all to be proud of.”
Recovering the top spot in the CNBC and other business rankings has been a priority under both Northam and his predecessor, Gov. Terry McAuliffe. McAuliffe hired Stephen Moret to lead the Virginia Economic Development Partnership in 2017 as the agency underwent a major series of reforms that have been critical to its success.
“The work they’ve done with private sector companies, the McAuliffe administration, the Northam administration and the General Assembly has been absolutely key to getting back to the Number 1 position,” said Todd Haymore, who was secretary of commerce and trade under McAuliffe as the state began its pursuit of the Amazon HQ2 project in 2017.
Northam also credited leaders of the Republican-led legislature for working closely with the executive branch in vetting Amazon and other major economic deals.
“They have been a very large part of our economic development success,” he said.
House Appropriations Committee Chairman Chris Jones, R-Suffolk, is a member of the Major Employment and Investment Project Approval Commission, which includes legislators and administration officials.
“It’s been a team effort,” Jones said Wednesday, citing the legislature’s central role in reforming VEDP and adopting a $6 billion transportation funding package in 2013 under then-Gov. Bob McDonnell, a Republican.
Regaining the top ranking also has been a priority of the Virginia Chamber of Commerce.
“I do want to credit pro-business policymakers on both sides of the aisle and business leaders for working together to accomplish this goal,” chamber President Barry Duval said.
House Speaker Kirk Cox, R-Colonial Heights, said, “Our highly-educated workforce, our business-friendly regulatory environment, low taxes, and our ongoing commitment to education make our commonwealth a great place for any business, from a mom-and-pop startup to the Fortune 500.”
However, Cox said Virginia’s business ranking is based on Republican initiatives and “comes despite policy proposals from Democrats that would have set Virginia back.”
Senate Majority Leader Tommy Norment, R-James City, said that “all Virginians should take enormous pride” in the top ranking, which he attributed to General Assembly leadership that he warned could be undermined in the legislative elections in November.
“As Senate Majority Leader, I can guarantee Virginia will continue to champion economic development and job creation as long as there are Republican majorities in the House and Senate,” Norment said in a statement.
McAuliffe, a pro-business Democrat, said in an interview that he was surprised Republicans were making the ranking a partisan issue.
“It’s not something to play politics with,” he said. “It’s good for Virginia.”
McAuliffe recalled that when he took office in 2014, the state’s reputation had taken a beating nationally over a McDonnell-backed bill to require a “transvaginal ultrasound” before an abortion, as well as legislation aimed at onerous regulation of clinics providing abortions.
“We got to work and ended all the socially divisive legislation,” he said.
Northam also cited the state’s cultural “inclusiveness” as a factor in its business success, but the CNBC rankings said the governor’s “own past” had raised concerns, and Cohn questioned him on the air about the blackface scandal that engulfed him five months ago.
“I want to let this country know and certainly Virginians know that we are an inclusive state,” the governor said, after expressing regret over his handling of the discovery of a racist photo on his 1984 medical school yearbook page.
Virginia tied with California for 17th place in inclusiveness, which CNBC said it measures by a state’s laws against discrimination.
“The state does have strong legal protections against most forms of discrimination, but no explicit prohibition of discrimination on the basis of sexual orientation or gender identity,” the analysis states.
The state scored highest in its workforce and education system. Out of 2,500 possible points in nine categories, Virginia led all states with 1,610, followed by Texas, which was No. 1 last year, at 1,589 and North Carolina at 1,586.
Virginia scored lowest in its cost of living, at 35th, which CNBC attributed primarily to the high labor costs necessary for skilled workers in high-tech industries. Duval, with the state chamber, dismissed that concern, but said the low ranking reflects the state’s tax structure, especially at the local government level.
“I think this points to the need for tax reform,” he said.
For Northam, the ranking showcases the state’s efforts to diversify its economy so as to rely less on federal defense spending. Since he took office 18 months ago, the state has added $18.5 billion in new capital investment and created more than 50,000 jobs, he said.
While much of that investment has been focused in Northern Virginia and other population centers, the governor said his administration has sealed economic development deals that will bring $2.5 billion in capital investment and create more than 8,000 jobs in rural areas and economically distressed communities.
He emphasized additional state funding to expand broadband communications networks throughout rural Virginia and the adoption of his proposal to spend more than $2 billion in improvements to Interstate 81 in western Virginia.
Northam said nothing has been more important to Virginia’s success than improvements in workforce development, which relies on an education system that begins in K-12 and extends to community colleges and universities that are accelerating their efforts to expand the number of graduates with advanced technology degrees.
“We want to train talent, and then we want that talent to stay in Virginia,” he said.