BURDENSOME REGULATIONS NEGATIVELY IMPACT SMALL BUSINESSES

Anaheim, CA, Oct. 13, 2009
By Anaheim City Council Member, Harry Sidhu

With California first-time jobless claims hitting record high numbers, the persuasive words of John Kabateck, Executive Director, California National Federation of Independent Business, signify an urgent call to action: “We need to allow small businesses to do what they do best, which is to create jobs and stimulate the economy.” As evidenced by the recently released state-commissioned “Cost of State Regulations on California Small Businesses Study,” now is the time for re-assessing burdensome local and state regulations that negatively impact small businesses.

Eye-opening facts from this study include the following: The total cost of regulation to the State of California is $492.994 billion, almost five times the State’s general fund budget, and almost a third of the State’s gross product. The cost of regulation results in an employment loss of 3.8 million jobs which is one-tenth of the State’s population. Since small businesses constitute 99.2% of all employer businesses in California, and all of non-employer business, the regulatory cost is borne almost completely by small business. The total cost of regulation was $134,122.48 per small business in California in 2007, labor income not created or lost was $4,359.55 per small business, indirect business taxes not generated or lost were $57,260.15 per small business, and finally roughly one job lost per small business. The total regulatory cost of $492.994 billion translates into a total cost of $38,446.76 per household, or $13 ,052.05 per resident. The total cost per household comes close to the median household income in California. Clearly, the “Cost of Regulation” is everyone’s problem.

Moreover, the study enlightens by stating: “The ultimate drivers of growth and economic prosperity are innovation, economic risk taking, and investment. The majority of this comes from small business. Legislative and regulatory mandates often result in practices and enact polices that raise the costs of operating for small business or provide a deterrent to small business growth and hence provide disincentives for economic risk taking and entrepreneurship.” The case for regulatory reform is also credibly and forcefully explained in the study, as follows: “Since small businesses are the lifeblood of California’s economy constituting 99.2% of all employer businesses, efforts to make the regulatory environment more attractive will make California a more attractive state for doing business. This in turn will improve the state’s output, employment, labor income, indirect business taxes, economic climate, quality of life, living standards, and gro wth prospects.”

I am a small business owner and understand the difficulties faced on a daily basis due to overregulation. Small businesses need to be promoted and expanded for our communities and families to continue prospering and thriving in these difficult economic times. They are the driving force for our economy encompassing the dreams of individuals to create lives for their families, jobs for their neighbors, and security for the community. As an elected official, I will continue to support streamlined processes that encourage economic growth in traditional and emerging industries, thereby increasing employment opportunities.

By way of example, as an Anaheim Councilman, I and my council colleagues have diligently encouraged and supported improvements to various permitting processes within our Planning Department that have caused fees to be drop, shortened time frames, and resulted in significant cost savings, e.g., reducing time spent processing conditional use permits, eliminating pre-file applications, waiving parking studies where appropriate, creating a library of standard conditions, flexibility in conditions of approval, etc. Our Anaheim Public Utilities Department “Advantage Services” program also delivers a range of incentives, rebates, and simple tips designed to help our business customers save energy, water, and money on their utility bills. Additionally, Anaheim launched its first J.D. Power and Associates Customer Satisfaction survey in 2008 resulting in positive cost saving efficiencies.

We can all make a difference in creating job growth and stimulating economic turnaround by voicing our support for much-needed regulatory reform at all levels of government.