A bill currently moving through the Colorado Legislature aims to relax the regulatory burden for the more than 500,000 small business owners throughout the state.
Since it was introduced to the Colorado General Assembly on Jan. 11, the first day of regular session, Senate Bill 1 has already garnered support from many Colorado Springs business leaders.
“It just makes sense to us,” said Rachel Beck, government affairs manager for the Colorado Springs Chamber & EDC.
The bill — which passed the Senate Feb. 1 under the sponsorship of Sen. Tim Neville (R-Littleton) and was introduced in the House Feb. 6 by his son, Rep. Patrick Neville (R-Castle Rock) — would enact the “Regulatory Relief Act of 2017,” which is designed to alleviate the fiscal impact of state regulation on small business owners.
In essence, it would require state regulatory agencies to give small businesses — defined by the “State Administrative Procedure Act” as those with fewer than 500 employees — the opportunity “to cure a first-time minor violation of a rule instead of enforcing the rule by imposing a fine,” according to the bill.
The language of the legislation states that it would give those businesses a notice of the offense — rather than an immediate fine, as is now the result of minor violations — and 30 days to correct it before a fine is imposed (not including cases in which agencies are required by state or federal law to assess fines for noncompliance).
“When you’re a small business, there are a lot of things you have to do … and sometimes there is confusion about what those things are and how to do them,” Beck said. “This is a less punitive way of getting those businesses to comply.”
She said that the Chamber & EDC chose to support SB-1 because of the “collaborative approach” it takes to regulatory compliance, as well as the potential cost savings it creates for small business owners in cities such as Colorado Springs.
Per the language of SB-1, state enforcement agencies would also be required to notify offenders of minor violations in writing and include instructions for corrective action. The bill would also allow offenders to request additional time (more than the standard 30 days) to address minor violations related to administrative errors related to record-keeping, data retention and filing reports to state agencies.
Matt Barrett, board chair of the Tri-Lakes Chamber of Commerce, said that the bill is a welcome step toward making Colorado Springs — and the state at large — a more friendly environment for small business.
“I’m more optimistic today than I was four years ago,” he said in reference to what he considers a stemming of the regulatory tide.
Barrett, who formerly served as CEO and executive director of the Better Business Bureau of Southern Colorado, is also a small business owner. He is a partner in Business Truths Consulting, a firm that specializes in serving small businesses, and said that SB-1 would begin to reform a system that has long been fraught with over-regulation.
“I think it’s like most things in life in that it’s the pendulum effect,” Barrett said of the timing of the legislation. “There was a time when there weren’t enough regulations, and businesses ran wild, so the pendulum started to swing the other way. Now, I think we’re at a point when regulations are a little extreme and make it difficult to run a business — especially a small business.”
Barrett said that most of the small businesses he works with are run by owners who wear all the hats; making it difficult to keep up with detailed record-keeping and the paperwork it produces.
“Most businesses can’t afford an entire department devoted to those things,” he said. “In a small business, the owner is often the one who does everything … and when they are pulled aside to deal with penalties and paperwork, it sucks their time and energy away from making the business better. It dampens their ability to be successful, profitable, to hire more employees and to help improve the economy.”
Although he admits that not all Coloradans operating small businesses deserve breaks — some do set out to break laws, dodge regulatory agencies and seek out loopholes in the system — he said that it’s worth the risk in order to relieve the good actors in the state’s small business scene.
“You’re always going to have the bad eggs,” he said. “But I think this is intended to be more along the lines of helping the good eggs become better ones.”
A poll on regulatory burden
Another supporter of SB-1 is the National Federation of Independent Business, which on Feb. 15 released the findings of a poll that inquired small business owners about the effects of regulation.
The poll, which asked small business owners a series of 22 questions, found that:
• 28 percent of small employers consider costs related to compliance to be the regulatory issue of most concern to their business;
• 18 percent of those polled consider the most significant regulatory issue to be difficulty in understanding what they must do in order to comply; and
• 17 percent found their biggest issue related to the filling out of additional paperwork related to compliance.
The remaining poll participants experienced difficulties related to delays caused by regulations, limitations created by regulations and a variety of other issues:
• More than half of those polled attributed burdensome regulatory compliance to the federal government;
• 30 percent found state-level regulations to be most burdensome; and
• 15 percent found local regulations to be most burdensome.
A third of those small business owners claimed to have received a visit from a government official to inspect or examine records, licenses or various other documents related to regulatory compliance.
“What NFIB’s poll and Senate Bill 1 highlight more than anything is the importance of policy,” said Tony Gagliardi, Colorado director of the NFIB. “Few, if any, regulatory agencies consider the overall costs of all regulations on firms when considering their own. … Unlike tax policy, which broadly impacts all firms in much the same way, regulations are administered by a myriad of government agencies, at different levels of government impacting sometimes very narrowly defined types of businesses. … The better policy makers understand the impact of regulations on small business owners, the more able they will be to lessen the burden.”
The Business Journal was unable to reach for comment any opponents of SB-1.