CNBC’s annual “top states for business” rankings are out, and Virginia has moved up a notch, from No. 4 to No. 3.
There’s so much that may be mentioned for so slight a motion, so let’s say it. Before we do, let’s acknowledge that there could also be approach an excessive amount of consideration paid to these rankings. However, that’s additionally why they are vital — not as a result of they’re inherently proper, however as a result of they do develop into political speaking factors. There are different rankings which may technically be extra vital — the rankings from Site Selection journal are primarily based on precise company choices. For that matter, precise financial information — from job development to gross home product — are maybe the final word scores. However, CNBC hogs the highlight, so let’s see what all of the fuss is about.
1. This is nice information for each Youngkin and Spanberger
Governors all the time declare credit score when the rankings go up and get blamed after they go down. When Virginia’s rating fell throughout Glenn Youngkin’s first yr as governor, Democrats had been fast to blame him — despite the fact that a lot of the information CNBC used was compiled earlier than Youngkin took workplace. Because a lot of this information was compiled when Youngkin was nonetheless in workplace, and since Abigail Spanberger is governor now, each get to declare credit score right here. You can wager that if Virginia’s rating had fallen, Democrats would have blamed Youngkin and Republicans would have blamed Spanberger. Both of them are most likely relieved. “Virginia is doing a lot of things right and we’re looking at places where we can continue to rise,” Spanberger mentioned in a telephone interview. “We’re in the top 10 in six different categories and in the top half in every single category except for one, where we’re 26th.” That’s the price of doing enterprise, the place Virginia is up from 31st final yr. “By next year, we could be in the top half in every single category,” the governor mentioned. For what it’s price, she mentioned she speaks “quite regularly” with enterprise prospects.
2. This doesn’t settle the information heart debate
There had been concern in some enterprise quarters that the legislative try — led by Senate Finance Chair Louise Lucas, D-Portsmouth — to abolish the state’s tax breaks for information facilities eight years early would damage Virginia’s enterprise fame. There’s no proof of that right here, though these scores could have already been baked in by the point that occurred, so we don’t actually know.
It’s potential that Virginia’s many information facilities could have helped enhance the state’s rating. CNBC’s precise method (which adjustments yearly) is confidential, however we all know typically that “infrastructure” was the heaviest-weighted class and that “large-scale computing power” was one of many things the infrastructure class measured. We additionally know that Virginia positioned second total in infrastructure, making this the Old Dominion’s greatest class, which lends credence to the idea that information facilities could have helped Virginia keep excessive in the rankings.
On the opposite hand, Virginia’s rating in “business friendliness” fell, from fifth in 2024 to seventh final yr to 11th this yr. How a lot of that was due to the talk over information heart taxation and no matter sign that sends to different enterprise sectors? We don’t know. All we all know is that the “business friendliness” class contains “how hospitable states are toward emerging industries, including artificial intelligence, digital assets and cryptocurrency; prediction markets, quantum computing, and digital health.”
Spanberger believes the speedy decision of the information heart taxation situation — impose a brand new tax on energy consumption however hold the tax incentives — represents “a momentous step while maintaining our status as a trusted party.” We’ll see. We could not have a full image of the fallout from the information heart debate till subsequent yr this time.
3. Shovel-ready enterprise websites are an enormous deal
This is one thing that Ralph Northam began pushing towards the tip of his time period, Youngkin ramped up and the brand new funds that Spanberger simply signed continues, though perhaps not on the identical scale. CNBC makes it clear that these websites are an enormous issue. Under that closely weighted “infrastructure” class, CNBC says: “We look at the availability of vacant land and office and industrial space, and we measure state site readiness programs in terms of their overall funding and the number of certified or ‘shovel-ready’ sites.” Since we don’t know precisely what CNBC’s method says, it’s potential that these “shovel-ready” websites — such because the Southern Virginia Megasite at Berry Hill in Pittsylvania County — counted greater than something coping with information facilities.
We do know that one motive Ohio took first place in infrastructure — and first place total — is an emphasis on shovel-ready websites. Sometimes these investments aren’t significantly glamorous, however they are key to corporations who want to make fast choices. “Berry Hill is the best example of what it can be when you prepare a site,” Spanberger mentioned. “The more we can see the success of a place like Berry Hill, and how much it has benefited states like Ohio, we can continue to recognize the value.” That website could have been conceived years in the past for conventional manufacturing, nevertheless it’s develop into a magnet for expertise corporations. Youngkin introduced that the Microporous battery plant would find there. Just lately, Stack Infrastructure confirmed it is going to find a significant information heart advanced there. Even although Ohio took first in infrastructure, CNBC elsewhere in its report said that “Virginia’s site readiness program is the envy of the nation.”
4. Virginia’s economic system rating plummeted; federal cutbacks cited
Out of 10 classes, Virginia’s rating improved or stayed the identical in seven and dropped in three. Two of the three that dropped had been lower-weighted classes (“business friendliness” dropped from seventh to 11th whereas training dropped from first to fifth). However, the largest drop was in the second most-weighted class: the economic system. Virginia dropped there from 14th to 23rd. Why? Here was one of many few locations the place CNBC provided commentary: “Federal budget and personnel cuts have hurt the Old Dominion’s Economy ranking.”
Spanberger faulted the Trump administration — and it was clearly Trump who has been whacking the federal workforce. “The chaos of tariffs and trade policy and DOGE continues to impact Virginia,” she mentioned.
The Virginia Chamber of Commerce expressed concern about two explicit classes dropping, with out pointing fingers: “An Economy ranking of No. 23 and Cost of Doing Business ranking of No. 26 signal that we are losing ground where it matters most: job creation, economic growth, and private-sector dynamism,” it mentioned in an announcement. “Virginia must remain focused on advancing policies that strengthen our economic growth, the cost of doing business, and overall competitiveness.”
5. Education fell, however we don’t know why
Virginia has been first for three years in a row, first in 4 of the previous six rankings and was second in the one two occasions we’ve missed the highest spot. Virginia has been an academic dynasty in these rankings. This yr Virginia inexplicably fell to fifth. I say inexplicably as a result of CNBC gives no rationalization, so it’s not possible to know what precipitated this drop. All we all know is that this yr North Carolina is No. 1, up from No. 6. Spanberger didn’t have perception into why — the governor’s workplace received no heads-up on the rankings — however mentioned the drop “just means Virginia needs to endeavor to get ourselves back up to No. 1.”
6. Ohio took the highest spot; right here’s why
Ohio is the financial success story that no one is speaking about, however is perhaps now. Virginia has all the time been a contender in these rankings and has gained first place greater than every other state. Ohio ranked as little as 34th in 2010, however in any other case lingered in the 20s, an unremarkable rating in the center of the pack. In 2019, Ohio rose to No. 10, then fell again and didn’t enter the highest 10 once more till 2024. In 4 years’ time, it’s risen from 15th to 12th to seventh and now first.
Sunbelt states have sometimes dominated these rankings. This is the primary time a Rust Belt state has gained, until you rely the yr Minnesota took prime honors. Even if that is solely a symbolic victory, it’s an enormous image. Ohio is again. That’s doubtlessly excellent news for the elements of Southwest and Southside Virginia whose economies additionally mirror the Rust Belt.
It’s instructive to see what has powered Ohio’s rise. Ohio has definitely benefited from CNBC altering its method. In 2010, when the state ranked so low, it was second in transportation, however that class was solely the fifth-largest. Now that transportation class is infrastructure and CNBC’s weightiest class. Ohio has additionally invested closely in website choice, which seems to be one of many key infrastructure measures. CNBC says Ohio has appropriated $175 million for website improvement this yr. By distinction, Virginia has put aside $30 million for this yr. We assume that’s so much, however Ohio is spending nearly six occasions that.
CNBC additionally notes that Ohio has inspired the event of knowledge facilities and is now a Top 10 state for such amenities. It additionally factors out that information facilities have provoked a lot the identical opposition there that we now see right here.
Ohio has additionally significantly improved in the “cost of doing business category,” transferring from 39th in 2010 to first this yr. Ohio has minimize its revenue tax and adopted a flat tax system, which performs properly in the CNBC rankings however has drawn criticism that upper-income earners are the largest beneficiaries. Some Virginia legislators have checked out doing simply the alternative — elevating the tax price for upper-income earners — though these measures haven’t gone wherever.
States have been known as “laboratories of democracy.” They are additionally laboratories of economics. One worth of those rankings, nevertheless imperfect they could be, is that they do showcase examples of what’s working and what’s not. Ohio gives an instance that in some methods overlaps with Virginia (welcoming information facilities, investing in website improvement) and in some methods contrasts (chopping the revenue tax). We additionally want to acknowledge that some states begin with inherent benefits that others don’t. Virginia has the D.C. suburbs with a extremely educated workforce, one thing different states are hard-pressed to duplicate, and the port of Hampton Roads, which different states merely can’t have. Hawaii, which ranks useless final in the CNBC rankings, charges excessive for high quality of life however on the very backside for price of doing enterprise — the pure consequence of being a sequence of islands hundreds of miles from the mainland. It’s arduous to see what Hawaii may presumably do to change that.
The level being: There are some scores that states can change via coverage and others that they merely can’t.
Virginia is in the place that there are many things we are able to change to enhance our rating. However, we’re additionally in a place that there are many things we are able to do that will decrease our place. Politicians who care about these rankings should select properly.
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