Friday, June 19, 2009

Small First Step

We have been extremely critical of the mayor's, "five borough economic plan," because of the absence of any real effort to help small business-especially in the face of an economic crisis that has a disparate impact on the smallest entrepreneurs. Which is why we are somewhat buoyed by the efforts of Speaker Quinn-along with the mayor-to attempt to address some of the city's regulatory burdens, burdens that contribute to the bad city business climate.

As Crain's reports: "City Council Speaker Christine Quinn unveiled an agreement with the Bloomberg administration Thursday morning on a trifecta of measures geared toward making it easier for small businesses in the city to launch and prosper. Legislation will be introduced later this month to create a three-month penalty-forgiveness period for businesses and individuals with outstanding fines owed to the Environmental Control Board—the city tribunal that hears cases on quality-of-life violations issued by agencies like the Department of Buildings, the Department of Environmental Protection, the Department of Sanitation and the Fire Department."

In addition, the proposal looks to modify some fines, if and when the underlying problem is cured-a measure we've advocated for years: "Starting this fall, the city will waive interest and late fees for businesses that can prove they’ve corrected the underlying problems. Officials hope the measure will help small businesses weighed down by the debts and simultaneously boost revenue for the city, which has struggled to collect nearly $200 million in outstanding fines."

But, as our friend and small business advocate/lawyer tells us, the city could do a lot more; The fine forgiveness, by itself, he says, is nonsense. Why interest and penalty only? How about forgiving the fine if the issue has been corrected, he asks. Isn't that the public policy reason for a summons to force a violation to be corrected?

And he's right; but let's give credit where credit is due-as the NY Daily News does today in its editorial: "The city's small businesses loom large on payday, and that's why three measures aimed at nurturing and encouraging these vital enterprises are very welcome...Council Speaker Christine Quinn is aiming to ease the load. With Mayor Bloomberg's agreement, she'll back legislation for a three-month penalty-forgiveness period on quality-of-life summonses. Interest and fees will be waived when businesses correct the complaint and pay up."

The most significant proposal-at least if it's taken to its logical conclusion-is the review panel to examine the city's regulatory code. As Crain's points out: "Finally, Ms. Quinn formally announced the formation of a regulatory review panel charged with examining agency rules and regulations that affect small business, with the aim of stripping away those that are outdated or unnecessarily interfere with business operations. Council members, including David Yassky, D-Brooklyn, and James Oddo, R-Staten Island, will sit on the panel, along with representatives of the mayor’s office and heads of city agencies. They’ll issue a report to the mayor and council speaker by the end of the year. Mr. Yassky has said for the panel to be effective, members need to go one-by-one through rules and regulations and eliminate those that do not serve a legitimate public interest."

Another idea that we have been pushing for years, since the municipal code is larded with unnecessary-but revenue producing nonetheless-regulations. And, finally, there is a suggestion for a small business review panel: "Ms. Quinn suggested the panel examine the possibility of requiring a small-business impact statement before any new enforcement regulations are instituted. An estimated 70,000 small businesses spanning 55 categories are licensed by the city's Department of Consumer Affairs alone. And untold numbers of regulations affecting companies small and large are enforced by other agencies, ranging from the health department to the buildings department."

In all of this, however, we should realize that the elephant in the room-as the NY Post highlights in its editorial today-is the city's tax burden; one that is exacerbated by the sales tax hike in the latest budget: "Big mistake: At 8.375 percent, the tax already drives shoppers to stores in Jersey and elsewhere, costing the city business. Another bump surely won't help. Likewise, there's little in the plan to significantly reduce Gotham's other off-the-chart, broad-based levies -- which have long hurt employers and taxpayers and slowed the economy."

So, with stores going bankrupt in record numbers, the city is doing something-however mild-to try to help. Now if it could only reduce its tax addiction-and bring down the out of control costs of government-then the business climate would improve and more retailers, large and small, would thrive.