Published May 2002

Report outlines
small-business concerns statewide

By Kimberly Hilden
Herald Business Journal Assistant Editor

Statewide, the small-business climate has been hampered by regulatory uncertainty, concerns over government accountability and a perceived anti-business attitude in the ranks of government, according to findings by the Washington Policy Center.

In 2001, the center, a nonprofit research and education organization, surveyed more than 600 small businesses and held 15 roundtables in 14 cities to research the concerns and opinions of small-business owners.

The result of that work, the recently released report “The Small Business Climate in Washington State,” documents worries about the high cost and lack of choice in health care, a growing tax burden and the ability to comply with regulations.

“Government regulations are a common barrier to the success of many small businesses,” said Eric Montague, a policy analyst with the center and author of the report. He cited a report issued by the U.S. Small Business Administration that found that complying with federal regulations cost small-business owners about $7,000 a year per employee.

And that doesn’t take into account the state government regulations that affect small-business owners the most, according to the Washington Policy Center report. Of those surveyed, 56 percent of small businesses said state regulations affected them the most; 27 percent said federal regulations; and 17 percent said local.

“Most business owners don’t have a problem with regulations, per se. They have a problem with the amount of regulations and the cost of regulations,” Montague said, noting in the report that the state administrative code runs to more than 34,000 pages.

“If those regulations are seen as realistic and common sense was used to develop them, they don’t have a problem with them,” he said, “because business owners understand that there are certain things government needs to do and take care of (to maintain) a positive quality of life.”

Government accountability was another sore spot with small-business owners, the report found.

“Roundtable participants expressed doubt that state agencies were faithfully following legislative intent in implementing new laws,” according to the report.

The state Department of Labor and Industries’ new ergonomics regulations, land-use restrictions enforced by the Growth Management Hearings Boards and the revised light-rail plans adopted by Sound Transit were cited as examples that emerged in the roundtable discussions.

Other findings of the report include:

• Survey respondents identified the cost and availability of health care as the No. 1 concern of small business, with 95 percent supporting private health insurance policies vs. government-run policies.
• In the survey and roundtable talks, small-business owners named the Business and Operating (B&O) tax as having the heaviest single impact on business.
• 70 percent of survey respondents said they oppose higher taxes to improve transportation systems, with “two distinct areas of opposition” emerging: those who are not convinced a tax increase would be used to expand roadways and lessen congestion problems and those who are rural business owners reluctant to pay for the Puget Sound region’s problems.
• 53 percent of those surveyed opposed price deregulation of electricity, natural gas and other power sources, while 47 percent supported deregulation. And 77 percent chose “more generation” of energy as the primary way to solve the current shortage, while 23 percent chose “conservation.”

Already, the report’s findings have made their way into the state Legislature, Montague said, with center President Dann Mead Smith having addressed committees of the House and Senate in January.

But the Washington Policy Center isn’t through with the report information, Montague said. Gathering the data was only step one of the Small Business Project.

“The next step in our project is to go through and look at problems and put together proposals for how to address them,” he said. “That will happen with a conference (in early 2003) that will bring together policy makers and business owners.”

Out of that conference will come a paper — an agenda for reform, he said. “This is a long-term process — not something that’s going to happen overnight,” he said.

For more information on the Washington Policy Center, visit online at www.washingtonpolicy.org.

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