Top 5 states for business in 2012

These five states were the best places to do business in 2012, a year where states' financial fortunes finally saw improvement. Can you guess which state was number one?

3. Virginia

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    PNC Bank employee Jogesh Bagga, top center, asks US Senate candidate, Democrat Tim Kaine, a question during the Northern Virginia Technology Council's Tech Town Hall in Reston, Va., last month. 2012 marked Virgina's first year out of the top two in the Top States for Business rankings, as the state faltered in Infrastructure and Economy categories.
    Cliff Owen/AP/File
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What happened to Virginia — last year’s top state?

The Commonwealth is still a contender, finishing a solid third overall. But it faltered in two categories in particular: Infrastructure and Economy.

Infrastructure — specifically the state’s perpetually clogged highways — has long been an issue in fast-growing Virginia, and there is fresh evidence this year that the state is having trouble keeping pace. With some of the country's toughest commutes, the state dipped to number 33 in the category, down from 10th a year ago.

Virginia’s economy remains in the top tier. But it has suffered in part due to circumstances beyond its control. The state’s proximity to Washington, DC has helped in previous years. Late last year, however, Moody’s slapped a negative outlook on Virginia’s otherwise pristine bond rating because of the federal government’s fiscal crisis. That contributed to Virginia slipping to 10th from eighth in our Economy category this year.

While still the envy of most states, Virginia declined in a total of six categories in 2012. The other four are Cost of Doing Business (32/21), Education (13/6), Technology & Innovation (14/11) and Business Friendliness (4/3). In this competition, you can’t post that many declines and stay on top — or, it turns out, finish second either.

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