If you were the Governor, or a leader in the Legislature, where would you place your bet for future economic development in West Virginia? Would you prioritize the development and recruitment of talented, highly-educated workers, researchers and teachers to build up our state’s brainpower, or take a much more aggressive whack at eliminating what are generally described as non-competitive taxes such as the business franchise tax?

Ideally, of course, we could do both…if only we had the budget flexibility to do so. But as everyone knows, we have to make tough, thoughtful decisions. Both approaches are being considered this session in the West Virginia legislature in various forms. Bucks for Brains? A clear step towards attracting talented researchers and beefing up our talent base. Elimination (over time) of the franchise tax? An ongoing effort to get to a level playing field with successful neighboring states such as Virginia.

Both pathways have some supporting evidence, but none of it is so clear as to shine an inarguable light on the subject. Is Virginia so successful because of low taxes, or because of its close proximity to the Washington, DC, federal spending spicket and the existence of highly respected universities (and corresponding leadership in % of adults with college degrees)? The answer you give may say more about your political leanings than it does about the available evidence. There are many arguments in favor of tax cuts, and many questioning their value.

We don’t have any economists on the volunteer team of Create WV, so we won’t pretend to know for sure. However, it does seem obvious based on a review of various pockets of prosperity around the country that if you can’t be great at both, you better start focusing on being a leader in at least one of the categories while continuing to improve the others. Much of the New Economy innovation and wealth creation in the 1990’s and 2000’s came out of some of the most expensive places to do business: Silicon Valley, Massachusetts, New Jersey (a huge bio-tech center)…all of which often rank relatively low in “best places to do business” rankings. At the same time, the success the South has had in attracting business, especially Virginia, North Carolina, and Texas, often gets attributed to competitive tax structures.

Those notorious rankings (you know, the ones we’re always 49th or 50th in) from publications such as Forbes typically rate a variety of factors when championing the next hot spot for business. The states at the top are typically leaders in one or two areas, but competitive in almost all of them. Factors include:

• Overall business costs – Includes taxes, but many other factors such as energy costs (a specific area where West Virginia generally ranks highly)
• Labor rank – The elusive “talent” quotient – how educated is the workforce? How skilled in high-demand high-tech industries? How many of them available to get to work now?
• Regulatory environment – How streamlined is government to reduce friction when trying to start a business or a new business investment?
• Economic climate – This is a little bit of a chicken-or-egg rating, but the assumption is that the better the economy is doing today, the more opportunity there is for new business to thrive.
• Growth prospects – Another “finger to the wind” rating category, very difficult to evaluate with accuracy but generally an assumption on how much additional talent and investment is available to keep the growth going.
• Quality of life – The final controversial factor: according to whom? Is an hour-and-a-half commute less “quality” than a lack of cultural amenities? Is the opportunity to purchase a low-cost, beautiful home overlooking rich, lush forests of higher quality than having access to higher average salaries?

West Virginia does have a lot going for it that simply needs better packaged, positioned and promoted. But there are many efforts in West Virginia public and private sectors to address our areas of glaring weakness (visit www.visionshared.com if you’d like to join in and help). The question is, are we taking bold enough steps? Are we being aggressive enough? Or are we content to continue a slow, risk-averse approach while other regions of the country (and world) are taking bold steps to become leaders?

Where do you think West Virginia should make its boldest bet for the future?