Summer 2011
For real-time news on economic development, business and politics in the American South, go to www.RandleReport.com. For more information on economic development in the South go to www.SB-D.com and www.SouthernAutoCorridor.com for automotive news in the region.
Editorial
Arkansas quietly goes about doing its business very well
By Mike Randle
Which states in the South avoided disaster during The Great Recession? There were really only five: Arkansas, Louisiana, Oklahoma, Texas and West Virginia. Unemployment rates in those five states never came closed to rising above the national average in the recession and continue to do the same. Collectively, the five states sported an unemployment rate of 7.5 percent in August, more than a point-and-a-half below the nation's unemployment rate in the same month.
What do those five states have in common that could have possibly shielded them from the worst economy in our generation? All five earn massive amounts of revenue from oil and gas or other mineral extraction. The other things they have in common are conservative budget processes.
Arkansas particularly stands out in that regard and that isn't a coincidence. Arkansas was the only U.S. state that defaulted on its debt during The Great Depression. When the default process ended in the 1940s, the state enacted what is called the fiscal stabilization act. That budgeting process has worked quite well even in the worst of times and it is incredibly simple.
Every two years Arkansas lawmakers divide funding requests into three categories; A, B and C. "A" represents essential programs such as education, Medicaid, transportation and corrections. "B" represents essential and non-essential items such as expansions of the previously mentioned programs and cost-of-living increases for state agencies. Category "C" makes up the implementation of new programs and for the most part, items in this category are rarely funded in an economic downturn.
After establishing the categories, selected members of the legislative and executive branches meet behind closed doors to match up the categories with state revenue projections. Category A is completely funded initially, then they move on to B and if anything is left, certain items in category C may receive funding. The process enables Arkansas lawmakers to approve the budget without political battles. But it doesn't end there. Revenues are monitored daily to make sure they meet projections and if they don't cuts begin with category "C" and then move up.
Arkansas may not be the South's biggest economic development dynamo. Yet, when it comes to fiscal health, Arkansas has few peers.
mike@sb-d.com
Editorial
The Ten Best and Ten Worst Economic Development Governors in the South in the last 20 Years
By Mike Randle
SB&D has been monitoring economic development in the South for almost 20 years now. That being the case, we thought it would be a nice read if we weighed in on which Southern governors we believe were the best and worst at creating jobs and capital investment in their states over the last two decades.
We will preface this article with this: several of the governors and former governors listed below are friends of my wife Stacy and me. And a few are not (they like Stacy, just not me). But for the most part, we get along with the Southern governors we know.
Therefore, we will try our best to keep this subjective ranking as objective as possible, keeping our relationships – good or bad -- out of the equation. We have loosely based the ranking on results from the annual SB&D 100 during each governor's term(s) in office. It should be noted that the following rankings will list each governor in alphabetical order, so there is no distinguishing the best or worst based on their posted position.
EDITOR'S NOTE: The seven new governors in the South (Alabama, Florida, Georgia, Oklahoma, South Carolina, Tennessee and West Virginia) are not eligible since there hasn't been enough time to judge their effectiveness in the practice of economic development as of yet.
The Ten Best Economic Development Governors in the South 1992-2011
George Allen, Virginia -- 1994-1998
Steve Beshear, Kentucky -- 2008-present
Phil Bredesen, Tennessee -- 2003-2011
Carroll Campbell, South Carolina -- 1987-1995
Jim Hunt, North Carolina -- 1977-1985, 1993-2001
Bobby Jindal, Louisiana -- 2009-present
Rick Perry, Texas -- 2000-present
Ned Ray McWherter, Tennessee – 1987-1995
Bob Riley, Alabama -- 2003-2011
Mark Warner, Virginia -- 2002-2006
OUR TAKE: All of these governors landed some of the South's most impressive projects in history, including Volkswagen, BMW, Nucor, Saturn, Caterpillar and Hyundai just to name a few. Those left off the list that deserved consideration include Paul Patton (Kentucky); Kathleen Babineaux Blanco (Louisiana); Haley Barbour (current Gov. of Mississippi); Bev Perdue (current Gov. of North Carolina); Mike Huckabee (Arkansas); Lawton Chiles (Florida); Zell Miller (Georgia); Kirk Fordice (Mississippi); Ann Richards (Texas); Jim Martin (North Carolina); Bill Clinton (Arkansas); Ray Mabus (Mississippi); Brad Henry (Oklahoma); Don Sundquist (Tennessee); Tim Kaine (Virginia); Bob McDonnell (current Gov. of Virginia); and Joe Manchin (West Virginia).
The Ten Worst Economic Development Governors in the South 1992-2011
Mike Easley, North Carolina -- 2001-2009
Edwin Edwards, Louisiana -- 1972-1980, 1984-1988, 1992-1996
Ernie Fletcher, Kentucky -- 2003-2007
Jim Gilmore, Virginia -- 1998-2002
Guy Hunt, Alabama -- 1987-1993
Fob James, Alabama -- 1979-1983, 1995-1999
Sonny Perdue, Georgia -- 2003-2011
Mark Sanford, South Carolina -- 2003-2011
Jim Guy Tucker, Arkansas -- 1992-1996
Douglas Wilder, Virginia -- 1990-1994
OUR TAKE: For fear of losing more high profile friends, we won't touch this one with a ten-foot pole! All we will write is that not every Southern governor in the last 20 years made any of the above lists, including George W. Bush (Texas -- 1995-2000) and his brother, Jeb Bush (Florida -- 1999-2007). While Mike Easley's (North Carolina) SB&D 100 numbers were outstanding in his second term, the inside story that we have is he wasn't engaged in economic development at all. On the other hand, Jim Fain, Easley's Secretary of Commerce, was one of the best state economic development directors we have ever seen, making up for Easley's lack of interest in economic development.
mike@sb-d.com
Editorial
What a comeback: the auto industry is driving the recovery
By Mike Randle
It didn't look good in 2009 as Chrysler and GM entered bankruptcy. Earlier, Toyota had delayed the opening of its Northeast Mississippi plant and assembly plants throughout the South suspended if not stopped production altogether. We heard reports that Volkswagen, which announced its new plant in 2008 right before the *&%# hit the fan, would also delay the opening of its new Chattanooga plant. The automotive industry was dead in the South and in Detroit. Inquiries about opportunities in the South on our SouthernAutoCorridor.com Web site didn't just trickle in, they stopped coming in for months. Auto sales had hit a 30-year low. Not good.
Today, Volkswagen, Nissan, Ford, Toyota, Mercedes, BMW, GM (the new version), Hyundai, Kia and Honda are all adding capacity and jobs by the thousands in the Southern Automotive Corridor. There are also three automakers that we know of that are possibly looking at building new auto works in the South -- Hyundai-Kia, Volvo and Audi. Now, if we can just save the GM plant in Shreveport and reopen the GM plant in Spring Hill, Tenn., all will be well.
mike@SB-D.com
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