Small Businesses Aim to Be Heard in State Capitols

Small companies are finding that states are where the action is. No wonder that's where they want to be, too.

By Joan Pryde, Senior Tax Editor, the Kiplinger letters

May 23, 2006

For small businesses, Massachusetts' health care law is a wake-up call. With partisan bickering and gridlock the order of the day in Washington, states are taking the lead on more and more issues, acting as laboratories in which solutions to major problems are developed and tested.

More Main Street businesses want a stronger voice in state capitols. There's a lot at stake. Dozens of states are eyeing Massachusetts' new universal health care law, which requires businesses with 11 or more workers to pay the state $295 per employee annually if they don't offer health insurance. They may well copy the Bay State’s approach to help manage rising health care costs. Minimum wage laws are another area in which state legislatures are becoming active. Already 19 states have increased their minimum wage above the federal level, which has remained at $5.15 per hour since 1997. Twelve more are likely to do so by year end. Also on the agenda for state legislatures: government eminent-domain authority in the wake of a 2005 Supreme Court decision (Kelo v. City of New London) strengthening local governments' ability to condemn private property to make way for economic development. Legislatures in Alaska, Georgia and Missouri are among those that have acted this year to curb such use of eminent domain.

To make sure small firms' message gets across to state governments, the National Federation of Independent Business (NFIB), which has long been recognized as the voice of small business in Washington, is beefing up its presence in the states. Todd Stottlemyer, who in February became president and CEO of the NFIB, is determined to get more of the group's members involved in its state leadership councils, which operate in all 50 states.

Small businesses also plan to keep pushing Congress. But the NFIB won't get far on any of the group's top goals this year: creation of small business health plans, which would allow more smalls to join together to get better rates on health insurance; permanent repeal of the estate tax; and passage of tort reform legislation, including a cap on punitive damages against small businesses. Bills to advance each of those issues are tied up in partisan gridlock, and small firms will have to try again after the November elections.

That could force a change in approach for the NFIB, which has become closely tied with Republicans. Though Stottlemyer says NFIB endorsements are nonpartisan and based only on a candidate's positions on small business issues, the NFIB endorsed 265 GOP candidates and only four Democrats in the 2004 election cycle. Its political action committee donated over $800,0000, with more than 95% going to GOP coffers.

With Democrats poised to gain seats in November, and perhaps even take control of the House of Representatives, the NFIB is going to have to find a way to work with both parties if it hopes to get its agenda enacted. That could be one of Stottlemyer's biggest challenges in taking over from his predecessor, 14-year NFIB President Jack Faris. However, as the new man in charge, Stottlemyer will be starting with a clean slate and have no political baggage to hinder him.

NFIB membership has held steady at around 600,000 for many years, but Stottlemyer says he's more concerned with the participation of members than the sheer number. He's out to recruit businesses that are willing to work at the state and local levels to push small business goals.

One tool for recruitment is more member services. For example, with pro-business advocates in Washington making little headway in reducing lawsuits and red tape, the NFIB is moving to help small business owners navigate the complicated area of employment law. The group recently launched an employment law hotline for members to get answers to legal questions, and it has issued a model handbook for employees so members don't have to reinvent the wheel when creating their own. Next up: a series of guides designed to help members navigate state employment laws. The first two in the series, covering California and Ohio, will be published this summer.

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