Texas ranks number one.

WHILE MUCH OF THE NATION'S FOCUS is jumping from state to state during the presidential primary race, CEOs did their own "state-jumping," ranking the best and worst states to do business. CEOs chose states with no income tax as the best two states for business: Texas and Nevada. Making a return

For the worst states, they pointed to the highly regulated coastal states of California and New York. Rounding out the top three was Michigan, the struggling and once automobile capital of the world. Chief Executive conducted the annual polling right after the New Year and 605 top executives weighed in. This is the fourth straight year Chief Executive has asked select business leaders to weigh in on the issue.

Notable changes this year were many states from which political contenders for the 2008 presidential election hail or are focused on. Florida, last year holding the No.3 spot, plummeted this year to the tenth best state on concerns over its education system and workforce quality. Florida is widely seen as an important stronghold in presidential hopeful Rudy Giuliani's campaign for the White House. Senator John McCain's home state of Arizona rounded out the top five after Virginia.

Texas was listed as the top state to do business. It has held this distinction for the past four years. According to respondents who gave the states grades on taxation and regulation, workforce quality, and living environment, Texas scored strong in each category. Voicing the positive sentiment of many respondents, Charles Hannabarger, president and CEO of PSI Associates, said, "Texas has a strong economy with a diversified economic base. [The] cost of living is low and the quality of life is very good. The attitude and capabilities of the workforce are outstanding."

Nevada and North Carolina also performed similarly strong, with neither state getting any grade without an "A" or a "B" in it. CEOs recognized the problems low-tax states face when education is state-funded, and they pointed out its eventual impacts on the quality of the workforce. Though supportive of low taxes, CEOs decried the status of the education systems in many top states.

California was ranked as the worst of all states to do business. It received a "D" in taxation and regulation, and a "B-" in both the workforce quality and living environment categories. "California continues to be a tough state to do business," said John Keffala, president of Forbes Business Plan Advisors. He listed another concern: the high cost of housing in the state. Another respondent simply said, "Stay away from California at all costs."

[GRAPHIC OMITTED]

New York, ranked as the second worst state, has additional significance this year, though it has performed similarly poorly each year the polling was conducted. Main competitors for the presidency from each party--Rudy Giuliani for the Republicans and Hillary Clinton for the Democrats--are from the Empire State. Notorious for onerous legislation and high taxes, New York scored similarly to California in that category, receiving a "D". While it got a "B-" for the quality of its workforce, it narrowly escaped another "D" for its living environment, scoring a "C-".

Massachusetts, the home state of former Governor Mitt Romney, Republican presidential hopeful, was ranked as the fourth worst state for business. Like New York, Massachusetts got a "D" and a "B-" for taxation and regulation and workforce quality, respectively. It performed relatively stronger than New York in the living environment category, receiving a "C+". One respondent said that in Massachusetts, "they tax and restrictively legislate business without consequence."

For more details on both CEO Confidence and Best States, go to www.chiefexecutive.net/ceoindex.

Best and Worst States to do Business in the U.S. in 2008

    The Best                    The Worst
2008  2007  State           2008  2007  State

1     1     Texas           51    51    California
2     2     Nevada          50    50    New York
3     4     North Carolina  49    47    Michigan
4     9     Virginia        48    49    Massachusetts
5     5     Arizona         47    46    New Jersey

Best and Worst States to do Business in the U.S. in 2008

                Average             GDP Growth
                Position            Rank, Growth
                Change     Rank*    Rate (3-yr.   Employment Rank,
States          Per Year  '08  '07  avg.)         Unemployment Rate

Best States
Texas           N/C        1    1   15   4.0%     21  4.2%
Nevada          N/C        2    2    2   6.8%     42  5.4%
North Carolina  N/C        3    4    3   4.1%     31  4.7%

Worst States
California      N/C       51   51    9   4.3%     44  5.6%
New York        N/C       50   50   21   3.6%     29  4.6%
Michigan        N/C       49   47   51  -0.3%     51  7.4%

Hot States
(Largest Rank
  Increase)
Oregon           14       27   41    4   5.7%     43  5.5%
Alabama          11       12   23   17   4.0%     13  3.5%
Ohio              8       34   42   50   1.6%     44  5.6%

Cold States
(Largest Rank
  Decrease)
New Mexico      -13       29   16    7   5.2%      9  3.4%
Wisconsin       -11       44   33   42   2.2%     38  5.1%
Connecticut     -10       42   32   24   3.4%     36  5.0%

                Taxation &  Work Force  Living Environment &
States          Regulation  Quality     Infrastructure

Best States
Texas           A-          B+          B+
Nevada          A           B-          B
North Carolina  B+          B+          A
Worst States
California      D           B-          B-
New York        D           B-          C-
Michigan        F           C+          C
Hot States
(Largest Rank
  Increase)
Oregon          C+          B+          A-
Alabama         B+          B           B
Ohio            C-          B-          B-
Cold States
(Largest Rank
  Decrease)
New Mexico      C+          C+         B-
Wisconsin       D           B          B
Connecticut     D           B          C+