7 steps to help state’s small businesses

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Declaring, “small businesses are the backbone of Washington’s economy,” Gov. Chris Gregoire kicked off 2012 with a proposal to help businesses by simplifying the payment of business and occupation taxes and centralizing state and local business licensing. The governor noted, “It’s small businesses that employ the vast majority of our workers … If we can make it easier and cheaper for them to do business, they can afford to add more employees.”

More than 95 percent of Washington employers are small businesses, and history has taught us these businesses should be leading us out of the recession. Traditionally jobs created by entrepreneurs are a major catalyst for revitalization during times of economic stress.

But the events that created the recession have left small businesses struggling to recover. Unlike previous recessions, job creation by the small-business community has been anemic. For small-business owners to blaze the path to economic prosperity, the state must clear away burdensome taxes and regulations that clutter the road to recovery.

Last fall Washington Policy Center sponsored its fifth biennial Statewide Small Business Conference with more than 30 other organizations. Small-business owners from around the state attended and identified seven key reforms needed to improve the state’s business climate:

Workers’ compensation: The state’s workers’ comp system is badly in need of reform. A good place to start is to build on the limited voluntary settlement agreement law passed last year, which applied only to injured workers age 55 and over and will save $1.2 billion over four years. Lawmakers should give all injured workers the right to a voluntary settlement, which would double savings to $1.2 billion in two years.

Unemployment insurance: Washington’s unemployment insurance system has the second-highest per-employee cost in the nation. Tightening enrollment requirements in worker retraining would save money. The state should require workers to enroll in retraining programs when they begin collecting unemployment benefits, not two years after benefits expire.

Tax simplification: Currently 39 cities impose B&O taxes and issue their own business licenses, creating a regulatory nightmare for small businesses. The state should streamline collection of B&O taxes and create a master licensing system for businesses.

Regulatory reform: Regulatory red tape amounts to more than 100,000 requirements that a small-business owner must follow. Particularly burdensome are the state’s environmental regulations, which often are more restrictive than federal regulations. Officials should review environmental regulations to ensure state rules don’t exceed federal rules.

Health care: Washington faces a medical liability crisis as frivolous malpractice lawsuits continue to drive up costs of health care. Lawmakers should limit health care costs by passing effective tort reform that caps noneconomic damages.

Transportation: Many road projects are reducing lane capacity rather than easing traffic congestion by increasing lane capacity. State officials should work to relieve traffic congestion and not cut lane capacity for the traveling public.

Mandatory paid sick leave: Lawmakers are considering bills to impose mandated paid sick leave. Costs for small businesses would be staggering. Lawmakers should reject state-mandated paid sick leave proposals.

These are common-sense, practical ideas that will help small businesses grow and thrive.

Erin Shannon is small business director at Washington Policy Center. For more information: http://www.washingtonpolicy.org.