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Reviving Washington's Small Business Climate
Policy Recommendations from the 2005 Small Business Conference

by Carl Gipson
Director, Center for Small Business
2006-02

The United States’ economy is on an upswing and Washington is starting to catch up. Our state’s unemployment rate is down to 5.6%, from a high of 7.7% in 2001. Yet the national rate comes in below our state’s at 5%. Washington’s economy is at a crossroads but much of the economic policy and attention is geared toward larger companies and small businesses are oftentimes left behind.

Small businesses are the catalyst to economic recovery, in large part because of the sheer number of small businesses operating in Washington. According to the United States Small Business Administration, 98.1% of all businesses in Washington state qualify as small businesses (500 employees or fewer) and they employ over 55 percent of private sector jobs.

It is in the best interest for the state’s economic well being for policymakers and elected officials to create and maintain a business climate that encourages the startup and growth of small businesses and reduces barriers to their success.

In 2001, Washington Policy Center launched the Small Business Project to provide small businesses a way to air their concerns and frustrations with regulatory policies and other issues they face running a business in our state.

Over the last few years the project has:

• Produced a study, identifying the state’s major barriers to small business success: “The Small Business Climate in Washington State,”

• Held a Statewide Small Business Conference in 2003 in participation with more than 60 statewide and regional organizations.

• Published “Agenda for Reform,” a study analyzing the policy recommendations from the 2003 Small Business Conference that resulted in five Conference recommendations signed into law.

• Held a series of Issue Forums around the state in the fall of 2004 addressing specific areas of policy from the 2003 Conference.

• Based on the popularity of the Regional Forums and the 2003 Conference, WPC hosted two small business conferences in 2005. One was held in SeaTac and one in the Tri-Cities. Several of the issues varied, while the others addressed legislative updates from the past two years.

• Governor Gregoire keynoted the Statewide Small Business Conference in SeaTac, where small business owners said their top issue of concern is affording health care insurance for their employees and wanting help with the complicated workers’ comp and unemployment insurance systems.

• Business owners were asked for their recommendations for how to improve Washington’s small business climate and after discussing the available options, the attendees voted on the solutions they wanted to see enacted. “Reviving Washington’s Small Business Climate” is the report that summarizes the policy recommendations and provides background research on each one.

Beginning in January 2006, the part-time Small Business Project became the full-time Center for Small Business and Entrepreneurship—aimed at providing sound research on behalf of small businesses in our state.

Summary of Small Business Recommendations
2005 Statewide Small Business Conferences
November 10 – Tri-Cities
November 17 – SeaTac

Rising Cost of Health Insurance

Legalize sale of basic, bare-bones health insurance

Open competition and allow consumers to purchase insurance plans from other states

Freeze health care mandates until current mandates are studied

Transportation

Increase general-purpose lane capacity while focusing on chokepoints

Link transportation policy with growth management/zoning issues

Streamline environmental, administrative and operational costs

Tax Burden

Increase B&O tax exemption

Permanently repeal the state’s estate tax

Refrain from implementing a state income tax

Unemployment Insurance

Repeal “liberal construction” clause and reinstitute 2003 legislative reforms

Base benefit level on previous four quarters worked, not two quarters

Require training or community service as a condition of receiving benefits

Workers’ Compensation

Legalize private industrial insurance and move system towards more competition

Allow small groups and associations to self-insure

Increase fraud prevention efforts

Employment Regulations/ Regulation Reform

Create tip credit for restaurants

Reform prevailing wage laws

Regulator must deliver rules to businesses prior to enforcement

Tort Reform and Liability Reform

Establish a cap on non-economic damages for health care injury

Limit the amount of attorney contingency fees

Change joint and several liability rules so that companies only pay for a portion of harm for which they are responsible

Water and Energy

Rulemaking on stormwater should cease until the legislature addresses the issue

Refrain from imposing regulations beyond the scope of federal statutes

Get credit for water returned to rivers