December 26, 2003
Small Business Bulletin
MAP Commission Adopts Small Business Chamber's Concerns and Recommendations
On July 7 of this year, The SC Small Business Chamber of Commerce went
public with data it had obtained from the SC Comptroller General's Office.
Over 1.3 billion of the state's procurement dollars (approximately 42%) were
leaving the state to purchase goods and services every year. The Small
Business Chamber called for change to the state's procurement system so that
more of our tax dollars would go to in-state businesses to both improve our
economy and promote the growth and development of our small businesses.
In response to this alarming data, Lt. Governor Andre Bauer invited the
Small Business Chamber to participate in the state Procurement Subcommittee
he chaired on behalf of Governor Mark Sanford's MAP Commission (Management,
Accountability and Performance). The final MAP Commission report was
released on September 30, 2003, and the concerns and recommendations of the
Small Business Chamber are included.
The lengthy report calls on the state to buy more from in-state companies,
especially small businesses (www.mapcommission.sc.gov/reports.htm pages
135-139). The key to transforming the state procurement system into a much
needed incentive program for our small businesses is the use of a \"best
value\" analysis that would take into consideration the flow of the money.
The more money a contract leaves in South Carolina, the better value that
proposal offers for the state.
The Small Business Chamber will work with Governor Sanford, Lt. Governor
Bauer and the General Assembly to insure that these valuable small business
recommendations are implemented in the state procurement system.
USC Hotel Clears Zoning Hurdle Over Small Business Chamber's Objections
The Columbia City Council approved a zoning change that possibly paves the
way for the University of South Carolina and its foundation to have an
on-campus hotel. The Small Business Chamber had joined with the Greater
Columbia Hotel/Motel Association and the Hospitality Association of South
Carolina to oppose the hotel. The Small Business Chamber does not believe
that public agencies should be competing with the private sector.
With only one City Councilman (Jim Papadea) willing to defend the area
hotels from unfair competition, the local hotels took a last-minute offer
from USC to limit the occupancy of their hotel to 65%-85% in the first four
years and to not build any more hotels for seven years. In exchange, the
hotels had to agree to stop all on-going and planned lawsuits as well as
halt all negative publicity.
Fortunately, the Small Business Chamber was not a party to either the
negotiations or agreement with USC and its foundation and is presently
weighing its options for continuing the fight on this particular issue. One
possible course of action is an appeal of the zoning change. The change was
requested by the USC Development Foundation. However, records show that the
actual property owner is a private company set up by the Foundation to own
the land and the hotel. The Small Business Chamber has always championed a
regulatory process that does not favor big business (or in this case a big
state agency). A small business would certainly not be given such an
extraordinary regulatory consideration by local government.
The Small Business Chamber could also legally challenge the fact that USC
and its foundation have failed to follow state procurement policies in the
selection of a developer for the hotel and the selling of public property to
a private business. The Constitutionality of the public/private business
partnership proposed for this hotel is also questionable.
How To Avoid \"Buyer Beware List\"
On October 15, the SC Department of Consumer Affairs launched a website to
identify businesses that have not responded to consumer complaints or have
not taken promised steps to address complaints. Last week the Small
Business Chamber, the SC Automobile Dealers Association and the SC Merchants
Association met with Brandolyn Pinkston, Acting Administrator of the
Consumer Affairs, to address concerns about this \"Buyer Beware List\".
Obviously it is good business practice to respond to legitimate customer
complaints and to carry out promised action to resolve the complaints.
However, it is important to assure that procedures are in place to avoid the
\"listing\" of businesses due to illegitimate complaints or even simple
failure of businesses to be aware that they are being targeted.
Ms. Pinkston shared the safeguards the Department is using to avoid the
potential problems. At least four attempts will be made to contact the
business--three letters, a telephone call and fax if possible. To avoid
being placed automatically on the \"Buyer Beware List\" the business only has
to respond to the Department's inquiry. However, if the business promises
the Department to take a specific action to address the complaint and fails
to do so, then the business will be listed.
As a result of the meeting with Ms. Pinkston, the Department agreed to more
prominently display in the letter the importance of calling the agency and
to list a toll free telephone number for the Department.
Should your business receive a letter from the Department of Consumer
Affairs regarding a consumer complaint, the matter is serious regardless of
the legitimacy of the complaint. Please respond quickly to the agency to
discuss the matter and you will avoid any potential problems.
2004 Priority Issues
The President and CEO of the Small Business Chamber, Frank Knapp, Jr., has
set a goal of sitting down with each state Senator to discuss the
organization's top issues for 2004 before the legislative session starts in
January. The process is well underway and the response has been excellent.
The Small Business Chamber will continue to work on issues such as
supporting funding for technical colleges and tech tuition assistance,
property rights, regulatory reform, workforce development and others.
However, it is very important to focus much needed attention on the
following critical issues facing all small businesses:
Promote Small Business Development Through State Procurement. The State of
South Carolina spends at least 42% ($1.3 billion) of its state procurement
dollars out of state every year. State agencies should be encouraged to buy
locally and contract decisions should be heavily based on \"best value\" to
the state. \"Best Value\" would be calculated by following the flow of
money.more money staying in the state would receive a higher \"best value\"
score. A central repository of all state agency contracts should be
Stop State Agencies from Competing with Small Businesses. As their budgets
are decreased, state agencies begin looking at ways to take revenue from the
private sector. USC's new on-campus hotel will take millions of dollars a
year from local hotels and more hotels are planned. The SC Employment
Security OneStops are openly competing with private personnel agencies
resulting in 200 closing their doors in the last 4 years. A legislative
solution must be found to protect private businesses from unfair competition
from public agencies. S.403/H.3866 would prohibit institutions of higher
learning or political subdivision of the state from owning or operating a
hotel or resort.
Develop a Solution to the Small Group Health Insurance Crisis. Sixty-five
percent of South Carolina businesses with 50 or less employees do not have
group health insurance. These numbers will increase because small
businesses with coverage can no longer sustain annual double-digit increases
in health insurance premiums. The number of insurance companies willing to
write small group health continues to drop leaving only a few to compete.
S.349/H.3593 would require the State of South Carolina to create the vehicle
needed for all small businesses to aggregate together for the purpose of
acquiring group health insurance.
Obtain Income Tax Fairness for Small Business. Small businesses (mostly
sole proprietors, partnerships, S-corporations and limited liability
companies) pay a state income tax of 7% compared to the income tax rate of
5% for C-corporations. S.173/H.3314 would reduce the income tax for small
businesses to 5%. The BEA estimates the cost to be $76 million a year.
Fight Frivolous Lawsuits. Frivolous lawsuits and defenses cost small
businesses in terms of money, time and distraction. However, no data is
currently available to document the frequency of the problem. Small
businesses are unaware of their legal rights as to how to fight frivolous
claims and defenses to recover expenses. A reporting system and database
should be established to document the extent of the problem. Plaintiffs and
defendants should be automatically advised of the consequences of frivolous
lawsuits and defenses and how to fight them using Rule 11 and the Civil
Proceedings Sanctions Act (15-36-10). Efforts already being taken by the
judicial system to address this problem should be increased.