September 19, 2003
Report On Small Business Proposes Changes For City, Business Alliance, And Development Commission
Apparently, if each of the local businesses with 10 employees or less in the Portland area were able to add one employee, 39,000 new jobs would be created, effectively replacing nearly all of the metro area jobs lost in the past three years.
So says the executive summary of the Portland Small Business Prosperity Strategy (pdf), a report issued Wednesday by a consultant team charged by the Portland Business Alliance and the Portland Development Commission to develop an "action-oriented" strategy for the Portland area small business environment.
Prior to the PBA breakfast forum at which the strategy was released, I hadn't heard anything about it, and my admitted bias against the Portland Business Alliance -- or, more specifically, the Portland-bashing rhetoric of Kim Kimbrough -- gave me something of a skepticism going in.
As it turns out, the report's recommendations are directed not only at City Hall, but the Portland Development Commission and the Portland Business Alliance itself.
Most interestingly, is that the strategy focuses upon the smallest of the small: Businesses with ten or fewer employees (although that doesn't necessarily preclude it from benefiting larger small businesses as well).
"In the near future," the report says, "small business may be Portland's only viable growth market, a market that allows Portland to grow and prosper from within in a manner that respects the community's values and unique quality of life."
To put it another way, as Oregonian columnist S. Renee Mitchell does today, "They're the ones who create the city's ambiance, anyway. They sponsor community festivals, work on transportation and crime-prevention issues, and strengthen a neighborhood's identity."
Among its many recommendations (forty in all), is that the city's various and disparate business groups and coalitions come together as a Portland Area Small Business Council, with elements of the City of Portland, the Portland Business Alliance, and the Portland Development Commission forming a Small Business Support Team.
Many of the recommendations the report offers for the City and PDC don't necessarily strike as surprising, and many build either on previous recommendations from other reports or reforms and reorganizations already planned or underway. I suggest reading the report itself for the details on these.
The proposals aimed at the Portland Business Alliance are grouped into three main categories: Make small business integral to PBA -- not an appendage; Coordinate regional small business advocacy; As part of ongoing public-relations and marketing activities, include efforts to educate overall citizenry of the importance of small business prosperity to community vitality.
"The alliance, though," writes Mitchell, "has an identity crisis. The powerful lobbying group thinks it supports small biz but it has mostly been an advocate of big business and downtown interests. ... Now it's time for the alliance's mission to grow up and think small."
For my part, I have one question for the Portland Business Alliance, although I don't argue that it's some sort of panacea: Is it too much to ask that the Alliance be led by a Portlander?
I've seen no particular evidence that importing an outside hired gun -- Kim Kimbrough seems to make a career of roaming the country, heading up various municipal business-boosting groups -- brings leadership that recognizes the unique characteristics and cultures that define life and business in Portland as opposed to any other city.
If nothing else, turning to an outsider would seem to give the impression that Portland itself somehow does not possess the native business talent to lead what is in essence its chamber of commerce. And that sort of message is just the sort that the Portland Business Alliance should do everything it can to dispute.
Comments (5)
Dave Lister on 22 Sep 2003
A good example of the city's insensitivity to small business is the fact they scrapped the business tax reform plan over a projected fifteen million dollar revenue shortfall. Only two weeks previously the mayor had announced an eleven million dollar surplus. That made the net loss four million dollars. The reform plan would have saved our four person firm about ten percent in our county/city tax liability. Four million is chump change to the city of Portland. They could have picked it up by "tweaking" the plan a little or better yet, save it by not burying reservoirs, buying new computer systems, etc. etc.
In late July I received a visit from Rashid Ahmed of the PDC. He admitted that, by the city's own numbers, over ninety percent of employment in Portland comes from small business. There's plenty of talent available to help the city decide how to help small business; the small business people right here in town. After meeting with Rashid I offered myself in nomination to serve on the Small Business Advisory Council of the PDC. I have managed or owned small businesses in Portland since 1980. Other than an acknowledgement of my submission I have, after waiting six weeks, heard nothing from the SBAC.
The city mothers and fathers always look for the mythical "El Dorado" when it comes to businesses development. A good example is their banking on bio-tech for the North Macadam. The sad fact of the matter is if they would simply reduce the tax burdens and restrictions on small business those thirty nine thousand jobs would be created in nothing flat.
The One True b!X on 22 Sep 2003
That surplus was already being aimed at helping business by scaling back the surcharge used to help fund local schools, the premise being that since the City asked business the pony up for that cause, it made sense to reduce their share of the burden when the City ended up with more money than expected.
Dave Lister on 22 Sep 2003
The current City/County business license tax works this way:
The tax rate percentage is applied to a combination of net profit PLUS shareholders salaries and dividends. Most owners of small businesses will adjust their personal compensation to minimize net profit and hence minimize their state and federal tax liability.
The reform plan was structured to move away from this formula and toward a percentage of overall payroll. Small businesses for the most part would get a break. Larger businesses with large payrolls were going to get hit a lot harder. This only makes sense in that net profit plus dividends is generally a much smaller percentage of overall payroll in a large business (an example might be a manufacturing plant with two hundred employees) then in a five or six person operation where the owners are also employees.
Bottom line is, the reform plan would slightly help the little guys, but put a much bigger bite on the big guys. And, unless I'm mistaken, the PBA is primarily the big guys.
Rich Rodgers on 30 Sep 2003
For what it's worth, the effects of the proposal are somewhat different than described.
The current business tax exempts income generated from business conducted outside of the city--it was specifically designed this way in the 1970s in order to exempt manufacturers from competitive disadvantages. The new payroll tax, on the other hand, would not have exempted manufacturers like Gunderson, a company that builds rail cars and barges in NW.
These manufacturers would have been the hardest hit under the new approach. Their voices were loud in opposition to the plan, as were groups like the Oregon Restaurant Association, which is made of up businesses with low profits relative to the size of their payroll.
Ultimately, these business voices killed the proposal. The Council realized that the business community's perspective on this question was more diverse than originally thought. This opposition had already bubbled to the surface when the revenue projections became known.
I'm not surprised that people are trying to blame the city for this--the whole discussion has created an awful lot of tension within the business community--but it's just not accurate.
Rich Rodgers
Assistant to Erik Sten
Rich Rodgers on 30 Sep 2003
One additional comment:
The City Council voted to refund the $11 million surplus. This surplus came from successful efforts to curb spending in city bureaus and a few other factors. The refund comes in the form of a reduced city Business License Fee surcharge--the surcharge that was put in place to restore the FY 2002-03 school year.
The Council heard opposition to this business refund--namely from city employee unions who felt that the city should have used the money to bolster the health benefits reserve fund--but ultimately the council felt that businesses needed the relief right now.
Rich Rodgers
Assistant to Erik Sten