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‘Welcome to Texas!’: Musk’s California departure stokes the states’ rivalry

NEW YORK TIMES / 2016
                                Employees at Apple’s campus in Austin, Texas.
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NEW YORK TIMES / 2016

Employees at Apple’s campus in Austin, Texas.

DALLAS >> Long before Elon Musk, the Tesla magnate and billionaire Californian, announced that he was moving to Texas, Marie Bailey, a California transplant now living north of Dallas, fastened a customized license plate onto her very own Tesla, with a message that has become her ethos.

“Move2TX,” it reads in block letters, underneath an emblem of the one-starred Texas flag.

The news by Musk, who announced his move Tuesday, in a snub to California and its strong regulatory environment, added fuel to the long-standing rivalry between the nation’s two most populous states.

California, with its steep housing costs, raging wildfires and strict business regulations, has been losing residents to other states, with Texas as the most popular exodus destination. Of more than 653,000 people who left California last year, about 82,000 went to Texas, more than any other state, according to census figures.

Or, as The Stanford Review wrote in a nod to native Texan George Strait, “All of California’s Exes Are Moving to Texas.”

California and Texas — two economic powerhouses, one led by Democrats and the other by Republicans, with respective populations of 40 million and 29 million — are in many ways natural frenemies. It is a rivalry made up of In-N-Out versus Whataburger, of Disneyland versus the State Fair of Texas, of tacos versus, well, other tacos.

But as is the case in many No. 1 versus No. 2 matchups, the animosity has often been one-sided, with Texas, the wily underdog, playing the role of provocateur.

For years, Texas leaders have tried to woo companies and residents from the Golden State with promises of lower taxes, fewer regulations and eye-poppingly cheap housing — at least compared with California. In 2013, Rick Perry, then Texas’ governor, visited California and ran radio ads urging businesses to “flee” the coast. His successor, Gov. Greg Abbott, has eagerly picked up the mantle.

And there is evidence that the strategy is working.

In 2018, Apple, which has its headquarters in Cupertino, California, announced it would build a $1 billion campus in Austin. The financial services company Charles Schwab announced a move from San Francisco to the Dallas-Fort Worth suburbs last year. Most recently, Hewlett Packard Enterprise, a spinoff of Hewlett-Packard, which has been credited with starting Silicon Valley, said this month it would move its headquarters from San Jose, California, to Spring, Texas, near Houston.

“I only miss Disneyland and my family,” said Bailey, 41, who relocated in 2017 from the Los Angeles area to Prosper, a fast-growing suburb of Dallas, and now runs a real estate business focused exclusively on bringing Californians to Texas.

During the pandemic, she said, she had only seen the trend accelerate, giving her even more reason to champion life in the Texas suburbs. She said she had built a 5,000-square-foot house near a crystal lagoon for about the selling price of her outdated, 1,500-square-foot home in Southern California, and that she felt more accepted for her conservative political views.

Since last year, her mother-in-law, brother-in-law and sister have relocated to Texas. And Bailey said she had seen a flood of interest from small-business owners and truck drivers who she suggested were being driven away from California because of its laws and coronavirus restrictions on businesses.

“Yeah, we have nice weather, yeah there are beautiful beaches,” said Bailey, who is originally from Orange County, California, but felt she could not afford a relaxing quality of life in her home state. “You feel like you’re never going to get ahead.”

One particular draw to Texas is that it has no state income tax, though homeowners often pay higher property taxes. The real difference tends to show up in costs of living.

Musk, the bombastic head of Tesla and SpaceX, does not share the financial worries that have driven many out of California. In many ways, his move is symbolic.

Recently, he had clashed with public health officials in California over measures put in place to slow the spread of the coronavirus, which included shutting down production at Tesla’s factory in Fremont, a city in the San Francisco Bay Area. He called restrictions to stop the spread of the virus “fascist” and predicted incorrectly in March that there would be almost no new cases in the country by the end of April.

Texas, by contrast, has imposed limited restrictions on businesses during the pandemic, even as new infections soar.

Musk said Tuesday that he had moved to be near a new factory Tesla is building outside Austin. SpaceX also has a launch site near South Padre Island on the Gulf of Mexico.

Speaking at a conference hosted by The Wall Street Journal on Tuesday, he said California had become less accommodating to successful entrepreneurs and startups, comparing the state to a sports team that takes winning for granted. “They do tend to get a little complacent, a little entitled, and then they don’t win the championship anymore,” he said.

Sen. Ted Cruz of Texas greeted the news with the enthusiasm of a state that revels in turning non-natives into converts who share a familiar saying: “I wasn’t born in Texas, but I got here as fast as I could.”

“Welcome to Texas! @elonmusk,” Cruz, a Republican, tweeted. “Texas loves jobs & we’re very glad to have you as a Texan.”

California leaders, on the other hand, have treated Musk’s vows to leave mostly with indifference.

Confident in their state’s natural beauty and status as the vanguard for culture and technology, Californians have largely shrugged even as the state’s population growth has dipped in recent years to the slowest it has been in more than a century, as a result of decreasing immigration and a growing exodus to other states.

“You will know that California has truly crossed a line when home prices start falling,” said Christopher Thornberg, founding partner of Beacon Economics, a consulting firm in Los Angeles. As it is, he said, “there is more demand to live in California than to not live in California.”

Even Musk, he surmised, will likely spend significant time in California, taking advantage of all the pleasures the Golden State has to offer the uber-wealthy.

Thornberg said he believed that California had made policy mistakes in responding to the pandemic that might negatively affect the state’s business climate. But, he added, remote workers who have the option to leave “are sure as hell not moving to Texas.”

Critics say the growth in Texas has been propelled by the use of millions of dollars in tax breaks and incentives, an opaque, poorly regulated practice that has come under increasing scrutiny in the wake of the huge, public search by Seattle-based Amazon for a place to build a second headquarters. (Cities in the Dallas area competed fiercely, offering billions in incentives, while some in Los Angeles were actually relieved when the city was out of the running.)

Still, anti-California feelings among Texans have been drowned out by the fierce competitiveness and sheer growth seen in the Lone Star State.

“The state is very gung-ho, always trying to attract business,” said Nathan Jensen, a professor of government at the University of Texas at Austin. “They take California companies as symbolic wins.”

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