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    Document Summary
    - Report Published -

    Report Document No. 18

    Document Title
    2010 Annual Executive Summary of the Small Business Commission

    Small Business Commission

    Enabling Authority
    30-183 (4.)

    Executive Summary

    The Small Business Commission was established to study, report and make recommendations on issues of concern to small businesses in the Commonwealth. The powers and duties of the Commission include:

    • Evaluating the impact of existing statutes and proposed legislation on small businesses;

    • Assessing the Commonwealth's small business assistance programs and examining ways to enhance their effectiveness; and

    • Providing small business owners and advocates with a forum to address their concerns.

    The co-chairs of the Commission are Senator W. Roscoe Reynolds and Delegate G. Glenn Oder. The other legislative members of the Commission are Delegate R. Lee Ware, Jr., Delegate John A. Cox, Delegate William R. Janis, Delegate Clarence E. Phillips, Delegate Algie T. Howell, Jr., Senator Frank M. Ruff, Jr., Senator R. Creigh Deeds, and Senator George L. Barker. The gubernatorial appointees are Robert A. Archer, Lana McG. Ingram, Marilyn H. West, and Carlos Del Toro.

    2010-2011 Interim Activities.

    The Small Business Commission held three meetings during the 2010-2011 interim.

    July 19, 2010.

    The Commission met in Richmond, Virginia, on July 19, 2010, and heard the following presentations:

    • Recommendations of the Virginia Chamber of Commerce’s Small Business Committee--Commission member Robert A. Archer presented the recommendations of the Chamber's Small Business Committee which include (i) restructuring state-funded small business programs to best address the needs of small businesses, (ii) developing a series of “access to working capital” seminars to be held around the Commonwealth, and (iii) considering a small business risk pool for health insurance.

    • Overview of the Virginia Department of Business Assistance (VDBA)--Peter S. Su, Director of the VDBA and Assistant Secretary of Commerce and Trade, reported on the activities, noting that the VDBA has three business program categories: (i) financing through the Virginia Small Business Financing Authority; (ii) information through Business Information Services; and (iii) workforce development through the Virginia Jobs Investment Program. Mr. Su highlighted that for fiscal year 2010, the VDBA has provided financing to 80 companies, technical assistance to 1,420 companies, and assisted with the creation or retention of 3,784 jobs in the Commonwealth. However, Mr. Su noted that funding cuts, a lack of flexibility in the use of funds, and staffing reductions have limited the ability of the VDBA to provide services.

    • House Bill 309: Summary judgment; documents that can serve as basis for motion; House Bill 310: Offers of Judgment; costs--House Bill 309 would allow a motion for summary judgment in an action to based on certain documents, such as depositions or affidavits, that cannot be presently used to support such a motion. House Bill 310 provides a mechanism for a party defending a claim to make an offer to plaintiff. If the offer is not accepted and the plaintiff ultimately recovers an amount less than the offer, the plaintiff must pay the costs of the defending party. The Virginia Chamber of Commerce supported both bills and presented several witnesses to testify to that effect. The Commission received testimony from the Virginia Trial Lawyers Association in opposition to both bills.

    The Commission formed a working group to further deliberate the merits of House Bill 309 and House Bill 310 which would make a report at the next meeting of the Commission.

    September 8, 2010.

    The Commission met in Richmond, Virginia, on September 8, 2010, and heard the following presentations:

    • Virginia Department of Minority Business Enterprise--Ida Outlaw McPherson, Director of the Virginia Department of Minority Business Enterprise (DMBE), provided the Commission with an overview of the DMBE. The DMBE promotes the growth and development of small, women-owned, and minority-owned businesses (SWaM) as well as service disabled veteran-owned businesses in the Commonwealth, enhances the participation of these small businesses in Commonwealth procurement opportunities, and ensures fairness in the procurement process. DMBE certifies qualified businesses and works to pair certified businesses with state contract opportunities. Ms. Outlaw stated that the total number of certified businesses in Virginia increased from 4,956 in fiscal year 2006 to 17,346 in fiscal year 2010 and the number of contracts awarded to certified businesses increased by 20 percent annually since 2006. Ms. McPherson also noted that the small businesses served by the DMBE have requested (i) a more user-friendly way to find state contracts, (ii) elimination of user fees for small businesses accessing the Virginia web-based purchasing system (eVa) for state contract awards, and (iii) a centralized small business development center.

    • Virginia Small Business Development Centers Network--Jody Keenan, Director of the Virginia Small Business Development Centers Network (SBDC), described the programs and services available through the SBDC. SBDC is a partnership between the United States Small Business Administration, George Mason University, and 18 education and economic development institutions throughout Virginia with 29 offices statewide. The SBDC provides individual counseling to small businesses and provides clients with small group training seminars, conference and workshop series, and resource referral to government and private resources. From 2003 through 2009, SBDC counseled 26,412 clients, created 12,261 jobs, retained 15,485 jobs, and generated $20,581,924 in state and $20,217,281 in federal taxes.

    • House Bill 1258: Construction contracts; indemnification provisions--The bill provides that a provision in a construction contract (i) that requires the contractor to provide insurance coverage for the purpose of providing an indemnity that is prohibited under current law is void and unenforceable and (ii) by which the contractor purports to indemnify another party against liability for damage caused by independent contractors of the other party is void and unenforceable. In support of the bill, the Commission heard testimony that currently the law puts the onus and the insurance cost on the subcontractors, who do not have control over the safety of the worksite and property. Testimony against the bill was also heard to the effect that the bill would affect all parties to construction contracts, not just subcontractors, and that bill would interfere in private contract rights and increase construction litigation and costs as all parties involved would attempt to determine liability in court.

    • Report of Work Group on House Bill 309 and House Bill 310--Delegate Oder delivered a report on the Small Business Commission Work Group on House Bill 309 and House Bill 310, which had convened prior to the full Commission meeting. Del. Oder reported that the bills were thoroughly discussed, and opposing sides were unable to reach a compromise.

    December 6, 2010.

    The Commission met in Richmond, Virginia, on December 6, 2010, and heard the following presentations:

    • Importance of Virginia's Health Care Industry--Larry Sartoris of the Virginia Hospital and Healthcare Association provided the Commission with an overview of the impact of the health care sector on Virginia's economy. His comments underscored that health care is a major employer with well-paying jobs and that Virginia's health care, when compared to other states, provides high quality at low costs. Mr. Sartoris also addressed the effect of the federal health reform legislation on the health care industry in Virginia.

    • Patient Protection and Affordable Care Act--Susan Maley Rash, Vice President of BB&T Insurance Services, provided an overview of the federal Patient Protection and Affordable Care Act (PPACA) and the ways it may affect small businesses. Ms. Rash noted that the effects of the PPACA on small businesses include added uncertainty and new taxes. Ms. Rash also noted that that PPACA contains some positive elements, including a tax credit for businesses with fewer than 25 employees that provide health care coverage and incentives for wellness programs. Other aspects of the PPACA that Ms. Rash addressed include high risk pools for uninsured persons with preexisting coverage, health benefits exchanges, and the penalties to be assessed on employers with 50 or more full-time equivalent employees that either do not provide health care coverage or that provide employee coverage that is deemed to be unaffordable.

    • Evaluation of Virginia's BPOL Tax--Christine Chmura of Richmond-based Chmura Economics and Analytics presented the Commission with the results of a study of the business, professional and occupational license (BPOL) tax. The study, which was commissioned by the Virginia Retail Federation, evaluates the relationship between BPOL taxation and a firm's profitability. Ms. Chmura concluded that Virginia retailers pay a higher percentage of profits than the industry average and that there are widespread differences in the effective BPOL tax rates as measured both by industry and by localities. Ms. Chmura also discussed alternatives to the BPOL tax, including replacing it with other taxes, creating consistency across jurisdictions and across industries, taxing profits rather than gross receipts, and exempting start-up businesses.

    • Small Business Performance in Virginia and the Region--Robert Schnorbus of the Federal Reserve Bank of Richmond gave the members of the Commission a snapshot of the national economy, Virginia's labor market, and a small business perspective. He concluded that the recovery of the U.S. economy so far has been sub-par and remains sluggish and fragile. Virginia's employment picture has been better than that of the nation's, but seems to have lost steam lately. Small business employment, particularly in the service sector, experienced an unusual decline during the recent recession. While small businesses in the region are experiencing tight credit, they are primarily being constrained by weak demand for their products and services. Finally, he observed that small businesses are reluctant to expand hiring. This reluctance is likely to contribute to a sluggish economic recovery in the Commonwealth. With regard to employment growth, it is projected that the economy will not recover the jobs that were lost in the recent recession until the end of 2012.

    Summaries of the Commission's meeting for the 2010-2011 interim may be found on the Commission's website: http://dls.state.va.us/business.htm. The Commission does not intend to submit a further report for publication.