Crippling state regulations and spiking insurance costs dominated a discussion last week between a handful of Rhode Island small business owners and President Bush’s point man fighting for the rights of small business owners in Washington, D.C.
Thomas M. Sullivan, chief council for advocacy for the U.S. Small Business Administration, visited Rhode Island last week to testify for the General Assembly in favor of a bill that would block state agencies from creating regulations that would hurt small businesses.
At a breakfast meeting held March 26 at Kent County Hospital, half a dozen small business owners told Sullivan what he said he already knows: Rhode Island places a greater regulatory burden on small businesses than the federal government does.
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Rhode Island small businesses must comply with separate sets of rules imposed by the state and the federal government. The “double regulation” is confusing at least and potentially causes financial hardship said Paul Martineau, owner of The Employers Association, a human-resource services firm based in Warwick.
Ken Kubic, who is co-owner of Kubic and Conradi Consultants and is also the president of the Rhode Island Marine Trade Association, said Rhode Island’s marine industry is more hampered by state regulations than federal regulations.
“The (federal) EPA has a habit of letting (Rhode Island’s Department of Environmental Management) be stricter than their regulations, and they even encourage them to do that – they give them millions of dollars,” said Kubic. “Tell the President, if state agencies are stricter than the feds, they shouldn’t get the money.”
Sullivan told the group that Rhode Island elected officials need to realize that they’ve got to take barriers away from entrepreneurial growth.
“California is a great example,” Sullivan said. “That state ran a budget deficit for many years before realizing, ‘we can’t keep adding new rules.’ State agencies should regulatory flexibility, meaning they need to consider the impact on Main Street. If you’re going to be stricter, you’ve got to do the analysis that the EPA and the U.S. Army Corps of Engineers does.”
The business owners also spoke of the problem their businesses are experiencing keeping pace with rapidly rising health care costs.
Andrew Shatz, of Frank Shatz & Co., a custom woodwork business, said his company recently had to stop providing full health coverage for its 10 employees after the cost of insuring the workers went up 30 percent.
“We require skilled labor for what we do, and we’ve always paid 100 percent of health care benefits to attract them. It was obviously cost prohibitive, yet we continued,” said Shatz. “With such a small operation, when you have 10 guys and four of them are lead men, and you have to start telling them you have to start pulling back benefits, you’re on egg shells.”
Sullivan said the fact that Rhode Island has only two major health insurers puts the state at a disadvantage, because businesses here have less bargaining power when it comes time to renegotiate health care contracts.
He recommended allowing for Association Health Plans, in which businesses ban together across state lines to increase bargaining power, as an example of what state legislators can do to make health coverage more affordable for small firms.
“It’s not a silver bullet. It’s a start, and it gets at bargaining power, driving more competition into the market,” said Sullivan. “The inability of small business owners to afford health care is absolutely a national crisis, and people have got to get off the dime. Stop talking about it and do something. There’s a sense of urgency that’s in this room that doesn’t get to Washington, D.C. There’s a complacency in the House and Senate, where they want to engage in dialogue and come up with some holy grail solution that is fantasy. This is urgent, and the time is now to provide leadership, pass laws.”
The bill being considered at the General Assembly is based on model legislation drafted by the SBA Office of Advocacy. Bill S-0198, sponsored by Senator Leo Blais, would establish additional procedures for the promulgation of rules and regulations pertaining to small businesses.
Also at the meeting were George DeTarnowski of the Central Rhode Island Development Corporation, Richard Nagele of Advantage Marketing, Brain Pestana and Fred Pestana of VR Industries, and Phil Slocum of The Slocum Agency.
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