Texas Governor Rick Perry

Texas has been called the best place for business in the U.S., and Ambassador Garza's home state has certainly weathered the economic recession better than most. Much of the credit for the strong state economy and pro-business climate can go to Texas Gov. Rick Perry. He's also a border governor with a great appreciation for a strong and secure Texas and a strong and secure Mexico.

Here, Ambassador Garza brings back his "Five Questions" column with an interview with Gov. Perry.

Ambassador Garza (AOG): Leading news and business publications, most recently the Wall Street Journal, the Economist and the National Review, hail Texas as the best place for business in the U.S. The state is weathering the economic recession better than most. You've said one secret to that success is "Don't spend all the money." Is it really that simple, or is there more to it?

Governor Perry (RP): More and more people are realizing that Texas is the best state in the country to live, raise a family and do business, especially during this time of national economic turmoil. A large part of our success is strong leadership that has made tough decisions and maintained a focus on conservative fiscal principles. In 2003, when Texas faced a $10 billion shortfall we closed the budget gap by cutting spending. It's that commitment to low taxes, limited government and fiscally conservative approaches that put Texas on the path to economic prosperity. Fast forward to 2009, and the national economic downturn, Texas was able to cut taxes for more than 40,000 small businesses while other states are raising taxes. Here in the Lone Star State we are maintaining a fair and predictable regulatory climate, and providing incentives to innovative and expanding companies that are looking to do business in the state. Texas is also the number one exporting state in the nation, home of the most Fortune 500 companies in the U.S. and the leading energy producer in the country. We also have a diverse and educated workforce, and we continue to educate and prepare our children to be competitive on not just a national, but a global scale. I believe these factors, paired with reasonable housing prices; a diverse, exciting culture and a high standard of living have attracted not only hundreds of companies, but more than 1,000 people a day to the Lone Star State, while propelling us to the forefront of the national economy.

AOG: The Texas Enterprise Fund and the Emerging Technology Fund have been great tools in recruiting new businesses or expansions in Texas. How have these funds and your work in economic development more generally helped attract business from out of state or cross-border?

RP: The Texas Enterprise Fund works as a "deal closing fund" that has the flexibility and financial resources to help strengthen the state's economy. The fund can be used for a variety of economic development projects including infrastructure and community development, job training programs and business incentives, and is used to attract new business to the state or assist with the expansion of an existing business as part of competitive recruitment. Since its inception, the state has invested more than $377 million and closed the deal on projects generating nearly 54,000 new jobs and $14 billion in capital investment.

Similarly, the Emerging Technology Fund allows the state to make strategic investments while strengthening our economic environment and cultivating research and innovation. These ETF investments help grow the state's technology sectors and bolster higher education institutions by attracting investment and top researchers to universities, while encouraging development and commercialization of groundbreaking technologies from the laboratory to the marketplace. Whether a treatment for obesity or a device used to assist premature babies, these technologies have greatly improved the quality of life of millions in Texas and beyond. To date, the ETF has allocated more than $99 million in funds to 78 early stage companies.

AOG: More Fortune 500 companies call the Lone Star State home than any other state, but what opportunities do you see for foreign investment in Texas, especially from Mexico and Latin American countries? And, what efforts have been targeted on attracting investment by Texas companies into Mexico?

RP: Mexico is Texas' largest trade partner, with more than $62 billion worth of goods traveling south from the Lone Star State last year. Additionally, many Mexican companies do business in the state, most notably in South Texas and the Rio Grande Valley. When companies look to invest or relocate, they see that Texas has the best economic environment in the nation. Our low taxes, fair and predictable regulatory environment and educated workforce have attracted hundreds of companies and made us home to the most Fortune 500 companies in the nation, and I believe that this attracts both foreign and domestic companies to invest in the Lone Star State.

Case in point is the decision by Santana Textiles, one of the world's largest producers of denim, to locate a manufacturing operation and hundreds of jobs in the Valley. They were encouraged by an investment by the Texas Enterprise Fund, but I believe our strong economic climate sealed the deal.

AOG:You've long said you appreciate the strong history and deep connections between Texas and Mexico and that the free flow of family, friends and free enterprise is important to both our state and Mexico. But, you're also keenly aware of the security threats our border region faces, especially since the launch of President Felipe Calderon's war against the drug cartels. How do you balance the need for openness and access with security?

RP: Border security is a federal responsibility, but ultimately Texas' problem. While we have implemented our own proven border security program and worked with Mexico to combat these issues, the federal government must step in and take responsibility for securing our border and our communities. That is why I've asked for 1,000 National Guard troops to be sent to the South Texas to assist border patrol agents in shoring up our border with Mexico. Until the federal government steps up and takes responsibility for our border, and ultimately national security, Texas will continue to implement border security strategies to keep our citizens and communities safe. This includes working with law enforcement to combat the threat of ruthless transnational gangs, which have expanded their influence across the state, recruiting members in our schools, communities and prisons. This session, the Legislature appropriated $113 million to help fill the gap of policing the border that the federal government has left open, as well as combat the transnational gang threat in the state.

AOG: I recently penned an Op-ed for the Dallas Morning News on education reform and the need to rethink local control. If we're truly going to prepare our next generation of Texans for the workplace and global economy, I think that's vital. What do you see as key to the future of public education and higher education in our state?

RP: In today's fast-paced global economy, students must be ready to compete worldwide, change careers rapidly to meet employer demands, and keep pace with evolving technologies. To keep Texas competitive, we have worked to keep students on track to graduate career and college-ready, grooming them to have the knowledge and skills necessary to be successful in the workforce, training programs, the military or a university, be it a two or four-year program. Students who graduate college and career ready are not only prepared to hold down family-sustaining jobs, they can change careers rapidly as markets dictate. These students also lower the cost of higher education because they don't need remediation.

Here in Texas, we have worked hard, especially in the last three years, to ensure our graduates are career and college ready. Not only have we adopted career and college ready standards and carefully chosen study materials to support them, we have improved our system so that we lead the nation in holding schools directly accountable for student outcomes. In addition to requiring students to adopt a "college and career ready" high school graduation plan, we introduced the largest pay-for-performance program to reward teachers who get results in the toughest subjects and classrooms. We have put Texas money where it matters, creating STEM schools and early college high schools.

These deliberate efforts have combined to nudge standardized admissions test scores upward along with the number of students who take them. In all, we have made serious headway that must be sustained.

More of these students are reaching Texas colleges. From 2000 to 2008, higher education enrollment increased by 280,000 students including a 54.5% increase in Hispanic enrollment in that same timeframe. In our effort to incentivize the desired behavior, we're increasingly working to reward graduations over enrollments. Not only have we dedicated $80 million in incentives to reward colleges that increase the number of degrees they issue, we have significantly increased financial aid. Since 1999, Texas has also increased financial aid by more than 550%, enabling 93,000 more students to receive state-funded financial aid in FY 2009 than in FY 1999.

So, the future of education in Texas depends on us staying the course on these innovative approaches to ensure Texans get the opportunities they need to challenge themselves and take their place in the workplace of the future.