Beaten by South Dakota

Texas loses No. 1 business ranking due to quality of life issues

Texas loses No. 1 business ranking due to quality of life issues

Texas State Capitol in Austin at dusk
After years on top, Texas has fallen to No. 2 in state business rankings. Photo by Stuart Seeger/Wikipedia

Gov. Rick Perry has repeatedly touted the dominance of Texas as a business-friendly state, but South Dakota has edged us out for the top spot in America's Top States for Business 2013 ranking by CNBC. Texas took No. 2 on the annual list, with North Dakota at No. 3 for business nationwide.

The Lone Star State held the highest honor in 2008, 2010 and 2012 — some of the worst years of the Great Recession — but CNBC points to the state's low score on its Quality of Life index for its waning prominence. Texas ranks No. 41 among the 50 states in that category, which takes into account crime, local attractions, environmental quality and health care. 

More than 28 percent of Texas residents are uninsured, a rate that will not improve anytime soon with Perry's refusal of Medicaid expansion and state insurance exchanges. Those measures would have rendered more than 1.7 million residents eligible for health care coverage.

Another factor affecting the Texas decline is the high cost of doing business, partly due to the high price of utilities and rent. The state's strong economy, stable infrastructure and high score for technology and innovation keep it afloat.