General Business/Regulatory Issues in Texas

Author: R Stell

General Business/Regulatory Issues

Regulatory flexibility (RegFlex)
Small businesses are the backbone of the economy in Texas just as they are throughout the country. Based on the definition of small business provided in the Texas Administrative Procedure Act, approximately 96 percent of the firms in the state are small according to the latest statistics from the U.S. Census Bureau. 

The goal of regulatory flexibility is to foster a climate for entrepreneurial success in the states so that small businesses will continue to create jobs, produce innovative new products and services, bring more Americans into the economic mainstream, and broaden the tax base. In 2002, the U.S. Small Business Administration's Office of Advocacy presented state model legislation, patterned after the federal Regulatory Flexibility Act, to improve the state regulatory climate for small business. Texas must strictly adhere to this model to ensure the viability and vibrancy of our small-business community.   
State purchasing
Texas businesses compete for state contracts every day, seeking to provide the state's administrative agencies with the goods and services that keep state government running. Many state agency purchasing guidelines encourage them to seek the "best value" for the state but the definition of "best value" is vague and agencies are left to make their own determinations.

In these tough economic times, state agencies should be required to consider the economic impact their purchases have when selecting vendors. Texas vendors, because they keep jobs and capital in Texas, should be considered carefully during the selection process and should be given every reasonable opportunity to compete. The Texas legislature should enact clear language that encourages state agencies to keep their spending in Texas whenever possible.

Preferential tax abatements
While many small businesses struggle to survive, their plight is made more difficult by governments that choose (in the name of "economic development") to use their taxing authority to encourage and support their competitors.

Often the beneficiaries of governmental aid are mega-retailers who bring developments that compete with existing local businesses. While they may be popular with some shoppers, these retail behemoths bring little real value to an area and drain wealth and jobs from the community over the long-term.

Local retailers gladly face competition every day but they should not have to face competitors subsidized using their tax dollars.

Lawmakers should pass legislation prohibiting the use of economic development dollars (including 4a and 4b sales taxes) to fund retail competitors and should, instead, encourage local taxing authorities to use economic development funds to promote manufacturing and other sources of real growth and prosperity.

Government competing against small business
In wide variety, state and local governments have begun engaging in activities that can be more cost-effectively performed by businesses in our state. These activities are inefficient, unfair, and harmful to the marketplace, particularly when they are subsidized using taxpayer funds.

While it is important for governments to operate as cost-effectively as possible by using "business principles," it is unfair for government agencies to use taxpayer funds to subsidize their participation in the private marketplace. Additionally, in those instances where governments do compete with the private sector, they should be subject to the same laws that govern their private sector competitors. These include tax, labor, and environmental laws.

Lawmakers should support legislation that prohibits state and local government competition with private enterprise. Lawmakers should remind government that it should not engage in an activity if there is a private business in the yellow pages that can get the job done more cost-effectively.

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