Last year's Top State for Business, South Dakota, drops 10 spots this year to finish 11th overall. It is the first time since our study began that a Top State fell out of the top 10 the following year, and proof that the competition never rests.
South Dakota falls in several categories this year, but nowhere more than in Economy, where the Mount Rushmore State tumbles to 20th place from sixth in 2013. While we found the state's housing market to be the healthiest in the nation, and the state's fiscal health impeccable, a nagging shortage of workers appears to be taking a toll. Economic growth and jobs growth have slowed to a trickle. Eleventh place is certainly nothing to be ashamed of, but based on our study South Dakota has seen even better days.
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The biggest drop this year is in Montana. Big Sky Country falls 15 points to 33rd overall, behind California. Cost of Doing Business went up in Montana—largely because of higher utility prices—and job growth slowed. Montana also slipped in our Infrastructure category after the EPA reported 7 percent of the state's population is served by community water systems that reported health-based violations.
Also falling double digits is neighboring Wyoming—a top 10 state last year thanks to its low costs and easy regulation. The Equality State slips to 21st this year. The state still offers the lowest tax burden in the country, but overall business costs are rising due to increasing costs for industrial and office space.
Vermont slips 11 spots as well, to 42nd overall. The brutal winter hurt the Green Mountain State this year. Not only did it slow the economy, but utility costs have gone from the lowest in the nation to among the highest. That's puts a big dent in Vermont's Cost of Doing Business score.
—By CNBC's Scott Cohn