Big government big threat to small businesses

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Colorado is driven by small businesses. To prove the state’s reliance on small businesses, Tim Jackson, the director of the Colorado chapter of the National Federation of Independent Business tossed out a few statistics at the NFIB-sponsored small-business forum held at Wells Fargo Bank in downtown Colorado Springs on Aug. 18.

“Fifty-five percent – roughly 165,000 – of all businesses operating in Colorado are owned by sole proprietors who operate without any full-time employees,” Jackson said. “Fifty-eight percent of all Colorado businesses have five or fewer employees; 76 percent have 10 or fewer employees; and 96 percent have 100 or fewer employees. Seventy-five percent of the net new jobs in Colorado are created by firms with 100 or fewer employees.”

Jackson said the small businesses view their “biggest threats as big government, followed by big labor and big law.”

Sen. Ron May, who also was present at the forum, said there are four main issues facing business owners in Colorado: The state’s right-to-work status and the state’s personal property tax laws are two. “How do we expect to get manufacturing companies to Colorado when we have to deal with those issues?” May asked. He said other concerns that need to be addressed are lawmaker profiles and the repayment of trust funds.

“We need to send people to the Legislature, to the board of county commissioners and to the City Council who sign checks on the front, not on the back,” May said. “They know business concerns, and it makes a difference how they vote.”

He said that the state is robbing Peter to pay Paul when “legislators take $200 million from the workers’ compensation fund and $26 million from the unemployment insurance fund.”

About eight Springs small business owners attended the forum as well, expressing their concerns to May and Sen. Ed Jones (also present for the entire forum), Jackson and NFIB President Jack Faris.

Worker’s compensation and unemployment insurance are two bones of contention for Sharon Krell, owner and manager of Imaging Systems, a Springs manufacturer of toner cartridges for laser printers. Krell cited a worker’s comp case, where she felt the law unfairly sided with the employee. After three months on the job, one of Krell’s employees (who had worked in the industry for seven years) was diagnosed with repetitive motion injury. “There is no way in three months he could have had that type of injury, but worker’s comp settled with him for $30,000,” Krell said.

However, Krell’s No. 1 dispute is with health care insurance. “I have nothing to complain about this year – my premiums went up just $60, but it’s still too high,” Krell said. “We pay 60 percent of our employees’ health insurance single premiums, but we have 27 employees and 15 of them are in manufacturing, and many cannot afford the premiums – one employee pays $600 for single coverage.”

She also laments the health insurance requirement that 75 percent of her employees have to enroll in a plan. “This percentage needs to be lower and regulated by the Legislature, not the insurance companies,” Krell said.

Mike Scandrett has operated Scanvic Enterprises Inc., a mechanical insulation contracting company, in the Springs since 1986. Following suit with the majority of his peers in business, Scandrett named health care insurance costs as the biggest negative to owning a business. He has 20 employees and pays 100 percent of the individual’s coverage.

Scandrett said Colorado mandates are not fair and negatively impact health insurance plans and the costs. “I don’t think legislators should put mandates on things like maternity coverage or psychiatric care,” he said. Scandrett also is in favor of association health plans to afford small businesses the same opportunities for group insurance as large corporations.

Scandrett is keeping an eye on federal legislation. One example is the Davis-Bacon Prevailing Wage Law, which allows wage surveys that determine pay rates for projects in certain areas. Under the ruling, municipalities that adopt similar laws, such as Denver, conduct surveys to assess average wages paid in the area. The survey then mandates the rate of pay for a particular project.

Seventy-five percent of Scandrett’s business is in Denver, and, because of the Denver law, each project dictates what he will pay his employees. “The wages are normally based on union wages because no one has time to do the surveys,” Scandrett said. “I’d like to see that law go away.”

He has belonged to the NFIB for 20-plus years, and the organization has kept him abreast of what’s going on and provided legislative alerts and business forums, like the Aug. 18 gathering. “I wouldn’t find any of this information if it wasn’t for the NFIB,” he said.

Although Mike Quadhammer is not a member of the NFIB, he was impressed with the forum and the opportunity to have a platform to express his business concerns. Quadhammer owns Krohn’s Coverings Inc., manufacturers and wholesalers of interior window coverings, such as blinds, shutters and shades. Incorporated since 1986, he has experienced his share of ups and downs in an industry that relies heavily on natural resources.

Quadhammer employs 40 people and follows an internal rule of thumb that if his labor costs outspend the total cost of production, the particular product is outsourced for overseas manufacturing. “If we had more of an incentive from the government to drive down our costs with automation, we might not make the decision to send the job away,” he said. “In my lifetime, we will never compete with the rest of the world, like Southeast Asia, regarding labor costs – we won’t win that equation, but through automation and the use of technology we will win in the world economy.”

However, Quadhammer said the political message to employ more people resonates better with constituents. “I think over the long haul, if our government was more focused on technology and automation as our friend and less on employing more people, we would employ more people,” he said. “The United States is the most productive labor market in the world, but productivity is still not our focus. We are saying it’s magic to employ more people, but that’s backwards – it’s all about productivity.”

Quadhammer is often stifled in his business because of government environmental restrictions. “All lumber harvesting is not bad, as former Vice-President Al Gore would have us think,” he said. “But the message falls into the same trap – it resonates well politically with the people. It’s an emotional issue, and it’s the same as government interfering with property rights because of a Spotted Owl or a Snail Darter.

“We (the government) can bring an industry to its knees. Politicians get a political black eye if they think of opening new lands for timber harvesting. We don’t need to harvest 100 percent of our lands, but wood is an unbelievable, renewable resource and better than the alternatives – plastic, petroleum products or iron.”

Quadhammer imports all of his wood from South America, and he said that he has never purchased wood from a mill he hasn’t visited and one that does not comply with industry standards and certifications.

Quadhammer also identified with his fellow business owners regarding health care costs and taxes. He said health care leaders must address three issues: competition, entitlement and tort reform. “First, there has to be competition among health care providers,” he said. “And people in this country have an entitlement mentality when it comes to health care – everything should be covered even if they don’t purchase the coverage. What about the person who has no coverage and wins a million-dollar lawsuit because someone made a mistake?” Lawyers, too, need to be forced to make decisions about viable lawsuits, Quadhammer said.

On the business personal property tax, he favors a flat tax instead of a yearly imposed property tax. “Economies that are taxed less, produce more,” he said.

Quadhammer echoed the sentiments of Jackson that the small business owner’s biggest hurdle is b
ig government: “I think government needs to be involved in more than the military or the legal system, but not a ton more – leave the work to private business.”

- Marylou.Doehrman@csbj.com