Mark S. Deion
Just weeks ago, the U.S. Small Business Administration feared that it would face budget cuts that would force it to fire 75 percent of its workers and drastically cut back services. But last Tuesday evening, Nov. 29, President Clinton signed an SBA fiscal year 2000 budget that featured far more moderate cuts than the reductions of $87 million and $38 million that were proposed in the House and Senate this fall. In fact, the administration’s budget will actually increase, from $820 million in fiscal year 1999 to $877 million for 2000, said spokesman Mike Stamler.
Still, that is $78 million less than the $955 million that the administration had requested. And the SBA still will have to cut 175 jobs nationwide. All of the cuts will come through attrition. But the administration will not be able to hire new people to fill all of these positions, said Acting Chief Financial Officer Joseph Loddo. While officials will attempt to shift the SBA’s workload around so that the impact of these cuts will be limited, they will not be able to accomplish that in every area, he said.
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”What we were looking at initially was a virtual shutdown of the agency,” said Loddo, referring to the cuts that had been proposed earlier. He added that this new budget is “very tight” and that it will be difficult to manage the cuts.
Acting Providence District Director Mark Hayward could not be reached for comment.
But the above budget numbers do not take into account the .38 percent budget reduction that nearly every government agency will have to make this year. For the SBA, that means a $3 million reduction, according to Deputy Chief Financial Officer Greg Walter. The Clinton Administration will provide guidelines for how the administration must go about making those cuts, Stamler said.
Despite some setbacks, SBA officials were generally excited about the 2000 budget, especially given that the cuts could have been substantially higher. This fall, officials predicted that the Providence district office would have to fire 12 of its 17 workers if the cuts proposed by the House went through.
”We did very well in the budget,” said Debra Silemeo, associate administrator for the SBA Office of Communications & Public Liaison. “We are quite pleased with how things came out.”
She’s pleased because many of the SBA’s core programs received strong support. For example, the SBA will guarantee at least $9.8 billion worth of loans next year, Stamler said. In addition, the administration will have an $84.5 million budget for its Small Business Development Centers, an increase of $2.5 million from the $82 million Congress appropriated for the centers in fiscal year 1999, Stamler said.
But the SBA fell short on its requests for what Alvarez and Clinton call “new market” programs, money that is targeted for inner cities. The new markets initiative, which as of press time was still awaiting Congressional authorization, received only $16.5 million in funding, $31.5 million short of the administration’s $48 million request. The three components of the new markets initiative, a venture capital program and the technical assistance program that goes along with it, and a large company-small company mentor program, received just $6 million, $9 million, and $1.5 million respectively in funding, Walter said.
The effect of lawmakers’ decision not to fund the administration’s request fully is that SBA agencies will be able to do less outreach than they had hoped, he said.
Most of the difference between the administration’s request and its budgetary award, however, came from a reduction in appropriations for disaster relief loans. In making its budget request, the SBA assumed that it would not have any carryover in disaster money from the previous year. But because it was a slow year for disasters, the administration actually had $85 million left over from the previous year, Walter said. Thus, Congress chose not to fund that $85 million, he said.
Stamler added that the need for disaster funds would be monitored throughout the year. If the SBA falls short on funds it can petition Congress for additional relief money. The administration will be able to fund $1 billion in disaster relief loans for fiscal year 2000, he said.
”It’s very difficult for the Congress not to approve additional funds – if people need disaster loans, they need them,” he said.
But the SBA, and its numerous allies, including several minority and women’s business groups, had to fight to get the budget appropriations that it got. These various groups, along with the SBA’s various district office, worked to convince their Congressional delegations that funding for the administration should remain intact, Loddo said. Clinton and Congress reached a compromise agreement, and the Senate approved the budget late Friday night, Nov. 19.
The agreement was a relief to many administration employees, Walter indicated.
”A lot of people were sitting on the edge of their seats, wondering what was going to happen to their jobs,” he said.
Craig Orfield, a spokesman for the Senate Committee on Small Business, could not be reached for comment.
Even with the SBA’s victory this time around, the administration has still suffered heavy losses in recent years, said Warwick small business consultant Mark S. Deion. For example, the administration cut its budget back 37 percent in 1995. The Providence office has seen its staff drop from 27 to 17 in the last 10 years, he said. In that same time period, however, the office has increased its workload. Whereas 10 years ago it approved $6 million in loan guarantees, it now approves $110 million in guarantees, he said.
Deion added that the SBA has increased its efficiency in order to cope with budget cuts and still improve its services. For example, it is now possible to download loan application forms from the Internet, he said. Still, Congress has continually under-funded the administration over the years, he said.
”Somebody tell me what’s wrong with what we’re doing,” Deion said, “because we seem to be doing a heck of a lot more with a heck of a lot less.”
