By Erin Shannon

Declaring, “small businesses are the backbone of Washington’s economy,” Governor Gregoire kicked off 2012 with a proposal to help businesses by simplifying the payment of Business & Occupation Taxes and centralizing state and local business licensing.

The Governor noted, “…it’s small businesses that employ the vast majority of our workers...If we can make it easier and cheaper for them to do business, they can afford to add more employees. This is the key to our economic recovery and to our social fabric.”

Small business growth is the engine of economic prosperity. Over 95 percent of Washington employers are small businesses, and history has taught us these businesses should be leading our economy out of the Great Recession. Traditionally the jobs created by entrepreneurs are a major catalyst for economic growth and revitalization during times of economic stress.

But the confluence of events that created the Great Recession—crumbling financial markets that dried up lines of credit and new loans, a Fannie Mae-fueled housing slump that devastated small businesses funded by second and third mortgages, and a debilitating collapse in consumer demand—have left small businesses struggling to recover. Unlike previous recessions, job creation by the small business community has been anemic, and that is bad for the economy, the government and our state in general.

In order for small business owners to blaze the path to economic prosperity, the state must clear away the burdensome taxes and regulations that clutter the road to recovery.

Last fall Washington Policy Center sponsored its fifth biennial Statewide Small Business Conference with over 30 other organizations. Small business owners from around the state attended and identified seven key reforms needed to improve the state’s business climate.

Workers’ Compensation: The state’s workers’ comp system is badly in need of reform. A good place to start is to build on the limited voluntary settlement agreement law passed last year, which applied only to injured workers age 55 and over and will save $1.2 billion over four years. Lawmakers should give all injured workers the right to a voluntary settlement, which would double the savings to $1.2 billion in only two years.

Unemployment Insurance: Washington’s unemployment insurance system has the second highest per-employee cost in the nation. Tightening enrollment requirements in the worker-retraining program would save money. The state should require workers to enroll in retraining programs when they begin collecting unemployment benefits, not two years after their benefits have expired.

Tax Simplification: Currently 39 cities impose their own B&O taxes and issue their own business licenses, creating a regulatory nightmare for small businesses. The state should streamline the collection of B&O taxes and create a master licensing system for businesses.

Regulatory Reform: Regulatory red tape amounts to more than 100,000 requirements that a small business owner follow. Particularly burdensome are the state’s environment regulations, which often are more restrictive than federal regulations. Officials should review environmental regulations to ensure state rules don’t exceed federal rules.

Health Care: Washington State faces a medical liability crisis as frivolous malpractice lawsuits continue to drive up the cost of health care for everyone. Lawmakers should limit health care costs by passing effective tort reform that caps non-economic damages.

Transportation: 85 percent of daily travelers use motor vehicles. Yet many road projects are reducing lane capacity rather than easing traffic congestion by increasing lane capacity. State officials should work to relieve traffic congestion and not cut lane capacity for the traveling public.

Mandatory Paid Sick Leave: Lawmakers are considering bills to impose mandated paid sick leave. The costs for small businesses would be staggering. Lawmakers should reject state-mandated paid sick leave proposals.

These policy recommendations come from small business owners who know what they need to be successful. None of the recommendations add to the budget deficit, nor are they revolutionary. They are common sense, practical ideas that pave the way for small businesses to grow and thrive.