WelcomeOregon Mayors Association

Newport, OregonJuly 28, 2006

Introductions

Oregon’s Small Business Landscape:Issues, Views & Taking Action

~ Panel Discussion ~

Christine Chin-Ryan, Chair GSBC President, Synergy Consulting, Inc., Portland

Wanda Henning, GSBC Member President, Creditor’s Collection Service, Newport

Stephanie Bailey, GSBC Member Executive Director, Klamath County Chamber of Commerce

Fred King,CEO, Hollander Consultants, Tualatin

Victoria Pruett, GSBC Ex-Officio Member Manager - Small Business Programs, Oregon Econ. & Comm. Development Dept.

Facilitator: Lou Ogden, Mayor of Tualatin

Today’s Discussion

Look Who’s Talking and About What: Governor’s Small Business Council on Small Business Issues in Oregon

Critical Topics for Small Business Healthcare Drug-Free Workplace Newport & Lincoln Area Impacts Tax Reform

Your Local Views and Future Actions

Governor Ted Kulongoski has emphasized his commitment to continued focus on critical

small business issues through the Council’s efforts.

Recognizing that small business is the lifeblood of a healthy Oregon economy, former Governor John Kitzhaber created the eleven member Governor’s Small

Business Council by executive order in 1998.

GSBC Mission

To improve the development, growth and vitality of

Oregon’s small businesses.

Purpose

To develop recommendations

on best practices for promoting the growth and economic

vitality of Oregon’s small

business sector.

Membership

Small business owners & managers representing diverse sectors & regions

Key educational & economic development organizations from around the state

MembersChristine Chin-Ryan, Chair, Synergy Consulting, Inc., Portland

Ike Apodaca, Vice Chair, Donde Marketing, Medford

Eric Blackledge, Blackledge Furniture, Corvallis

Samuel Brooks, Brooks Staffing/OAME, Portland

Gary Cardwell, NW Container Services, Portland

Steven R. Emery, EARTH H2O, Culver

Jeffrey Harman, Joseph Bronze, Joseph

Wanda C. Henning, Creditors Collection Service, Newport

Ilene K. Kleinsorge, Oregon State University, Corvallis

Daniel J. McMorris, Yoshida Group, Portland

Stephanie Bailey, Klamath Chamber, Klamath Falls

Ex-Officio MembersBill Carter, OR Small Business Development CentersChris Chandler DiTorrice, Central Coast EDAJerry Gardner, Oregon Dept. of AgricultureChuck Jones, The H Group, Inc.Christine Krygier, OR Small Business Development Centers

Maria McKissen, U.S. Small Business AdministrationLydia Muniz, Governor’s Advocate MWESBJennifer Nolfi, Portland Development CommissionVictoria Pruett, Oregon Economic & Community Development

J.L. Wilson, National Fed. of Independent Businesses

Oregon’s Small Businesses

O.R.S. Definition: A manufacturing business having 200 or fewer employees, or all other forms of business having

50 or fewer employees.

Source: ORS 285B.123(3)

There are 100,094 small businesses in Oregon.**Source: Oregon Employment Department

2005 Small Business Profile (100 or fewer employees)

Why Small Business?•Small business accounts for 43.7% of total private sector payroll

•Small business generates 51.3% of the state’s jobs

•Approximately $20.5 billion in small business payroll will contribute over $1.13 billion to state revenues* in 2005. (In fiscal year 2004-05, total state revenue from personal income tax is estimated to be $4.7 billion.)

•*Based on the Oregon Department of Revenue’s effective tax rate of 5.5%"

Why Small Business? 43.7% of Oregon’s payroll generated by

businesses with less than 100 employees

2005 annual payroll by business sizeSource: Oregon Employment Department

2005 State of Oregon Annual Payroll

by Business Size1-46%

5-96%

10-198%

20-4912%

50-9911%100-249

14%

250-50010%

500+33%

0<1%

Why Small Business? 51.3% of Oregon’s jobs come from small

businesses with less than 100 employees

2005 annual employment by business sizeSource: Oregon Employment Department

2005 State of Oregon Annual Employemnt

by Business Size

10-1910%

20-4914%

50-9911%

100-24914%

250-5009%

500+27%

5-98%

1-47%

2006 Action Plan

1. Identify important issues from the members’ perspective, with emphasis on critical actions.

2. Confirm these issues accurately reflect the views of Oregon’s small business owners.

3. Be a representative voice for small business during the next legislative session

Provide an updated position statement to the Governor on

issues impacting small businesses

JanMarNov

May

2006 Meeting Locations

6 Meetings – 4 Cities

July

September

Key Issues Identified 2004-2005Members’ Perspective

InsuranceHealthLiability/Workers’ Compensation

Access to Critical ResourcesCapitalHuman Resources

TaxesMarketing/Sales

Transportation

Sustainability

InsuranceCost and availability of health

and liability insurance is top

concern for small businesses.

Expand concept for using state’s insurance pool for businesses up to 100 employees.

Oppose dissolution or conversion of SAIF.

Support efforts and small business perspective in with the Senate Healthcare & Affordability Committee, including incentives for small businesses providing benefits

Resources: Access to Human ResourcesBusinesses need access to workforce

development resources.

Insure small businesses are adequately included in grants awards from the Employer Workforce Training Fund.

Assure integration of small business development center services, post secondary education resources and economic development assistance to support the needs of Oregon’s small businesses.

Resources: Access to CapitalSmall business’ contributions to a sound economy &

job creation require access to competitive capital.

Advocate for public/private capital resources to finance potential development, growth and expansion of small businesses.

Taxes

Recommend new tax incentives to encourage businesses to start-up, expand and/or move to Oregon.

Support legislation to stimulate economic growth in Oregon with a neutral tax revenue stream to the state.

Existing tax structure has negative impact on small business

success and growth.

Marketing

Encourage investment in programs involving mentorship, advising, technical assistance and relationship-building skills.

Support activities that increase small businesses’ ability to develop, market and sell their goods and services.

Domestic/international sales & marketing are essential for small business success and growth.

Transportation

Support a cooperative statewide approach linking transportation funding and industrial land development. (2005: Connect Oregon I $100m; 2007: Connect Oregon II $100m)

Advocate a statewide plan to expand the capacity and access of regional airport infrastructure.

Developing, maintaining and enhancing Oregon’s multi-modal transportation infrastructure is one of the state’s

greatest challenges.

Sustainability

Work with the Governor’s Sustainable Leadership Team in researching and identifying sustainable business practices.

Provide education to businesses and consumers on the advantages of sustainable business practices.

Sustainability is misperceived as a contributing factor to increased

business costs.

2006 Critical Issues:

Affordable healthcare and access for the under-insured

Impacts of drug-use in the workplace

Tax burden: income, capital gains, and property

Small businesses around the state say these issues need action now.

Health Care

Christine Chin RyanChair, Governor’s Small Business Council

Ask for Your Ideas on Health Care IssuesAsk You to Provide Input on Specific Issues via GSBC Questionnaire

Health Care

Pressure Is On To Reform Health Care System In Oregon

Current Efforts Senate Children’s Health Care Committee (Healthy Kids Plan)

Senate Health Care Access and Affordability Commission

Oregon Health Policy Commission (executive branch)

Former Governor Kitzhaber’s Archimedes Movement

Several ballot initiatives (one currently that has collected enough signatures, but questionable if sufficient number of valid signatures to be on November ballot)

Numerous health care advocacy movements pressing for major reforms

All of the above points to the concern of Oregon stakeholders (state, employers, advocates, providers) that we address health care reforms

Major Issues• Recruiting and retaining good workers by providing

good benefits

• Recognizing that providing the benefits must be balanced with financial ability to maintain benefits while staying competitive.

• Specifically in reference to the health care benefits:

Increasing cost of health care premiums Dropping coverage altogether or cutting

benefits Having to “cost shift” Regulatory requirements that drive up costs Large and continuously growing number of

uninsured

Major Trends Shaping Health Care Benefits Today

• Employer-sponsored insurance is shaped by the growing costs and other factors of the broader health care marketplace

• Transparency is needed in the marketplace for employers as purchasers to know what they are buying

• A business that offers good health care and good wages may have trouble attracting good workers because of poor schools and under-funded communities, etc.

• The health care system must seriously look at cost-containment

Solutions Under DiscussionParts of the Massachusetts’ plan Senate Commission on Health Care Access reviewed components of

the plan, specifically what if Oregon combined its individual and small group market

Senate Commission basically concurred that Mass model would not work for Oregon based on differences between two states (# of uninsured, etc.), but that components may be worth considering

“Pooling” of various health care dollars being consider to make sure all Oregonian have access to “essential” benefits

Another approach or ideas to the above would allow employers who already offer what the state considers “essential benefits” to be exempt from the pool

Ways to maximize Medicaid dollars as we get large match amounts from the federal government, and programs like the Healthy Kids Plan would help pick up health care costs for a lot of uninsured and low income workers children

Recognizing and exploring cost-containment

What you can do Mobilize small businesses in your area to

provide feedback to us using the questionnaire, the link will be provided

Be a sounding board and work with us on finding solutions

Contact us and share your suggestions and ideas

Participate in the legislative session-testify at hearings, call your elected officials, motivate small businesses in your area to do the same

Questions and Comments

Drug-Free Workplace

How some organizations and employers are making a difference for Oregon’s small businesses

presented by

Stephanie Bailey & Wanda Henning

Drugs and Our Communities

Importance of Creating Drug Free Workplaces

Importance of Creating Drug Free Workplaces

presented by

Stephanie Bailey

Presentation Overview

Impact of drugs on our citiesDrugs and our businessesBuilding a drug-free workplaceDrugfree Workforce Partnerships – Local and State

How you can help

Impact of Drugs on our Cities

More than 75% of “direct” drug cases involve Methamphetamines.

Local law enforcement estimate that 80 to 85% of property crimes, identity theft and fraud are Meth related.

Health effects of drug-use overburden local health treatment facilities.

Drug abuse increases use of child services.

Businesses lose millions each year by employees who use drugs

Drugs and the Workplace

Three fourths of illicit drug users and heavy or binge drinkers are employed.

Drug use costs U.S. employers $75-$100 billion per year.

60% of Oregon businesses identify drug use as a “great” concern yet only 25% have comprehensive drugfree programs in place.

In 2003 60% of Oregon employers identified on-the-job drug use as a great concern.

Rate of drug use among unemployed is twice as high as among employed, yet the workforce system is “disincented” to refer job seekers to treatment.

Building a Drugfree Workplace

Oregon businesses invest $50 million annually in drugfree workplace programs.

Raise legislator awareness of impact of drugs on workplace safety and productivity.

Consider supporting tax incentives to small businesses for implementing drugfree workplace policies.

Look into efforts to require drug screening as a requirement before receiving unemployment benefits.

Drugfree Workplace Partnerships – Local &

StateCreate local business drugfree workplace committees in each community.

Educate and mobilize the business community.

Establish a systematic statewide business community effort in Oregon.

OBP goal of 75% of workplaces in Oregon drugfree by 2008

How You Can Help

Increase your awareness of drugs in the workplace and in your communities.

Help work with OBP and local efforts to create drugfree workplaces.

Be a sounding board for the GSBC as we move forward

Provide feedback on impacts drug use/abuse have on your communities small businesses.

Fiscal Reform: Finding a balanced

solution

Stable Revenue System with Reduced Tax Burden

Tax Reform – Kicker Reform – Budget Reform

presented by

Fred King

Fiscal Reform: Finding a balanced

solutionThe BlueprintDemocrat, Republican and Independent Legislatures have come together to present a blue print for a more stable state financial future.

A plan the requires input from all Oregonians.

Comprehensive Solutions For Fiscal Reform Accountability in government

Budgeting ProcessEfficient Spending

Reduce the Total Tax Burden Stable Revenue Source Saving for the Future

The solution required are comprehensive:We need greater accountability in government in how the Legislature budgets and how state agencies spend.

We have the opportunity to reduce Oregonian’ total tax burden.

We need more stable revenue sources.And we need to save for the future.

Oregon’s unique state tax system stands out very clearly when compared with national averages.

72% of Oregon state taxes come from the personal income tax- this is the highest percentage reliance on a single tax among all states-Washington is second with its dependence on the sales tax.

For the states as a whole personal income tax account for 34.1% of tax collections while the general sales tax accounts for 32.7%.

What are the objectives of tax reform?To strengthen the economy; reduce taxes;reduce volatility; and increase revenue.

Whoops!! How can you reduce the tax burden and increase revenue??!!

10% of taxable income is unreportedIllegal drug economy pays no taxes for its ill-gotten gainsBusinesses will change from contributing 32% of the state’s revenue to 37% by shifting the cost of a consumption tax to their products.

Tourists

The combination of income tax cuts & property tax relief- Including renter relief- - is designed to reduce the tax burden for households of 4 across the income spectrum.

How can taxes be cut for all these typical households while at the same time raising revenue?

Answer: spreading the tax base to business, out-of-state taxpayers and activities not

currently picked up by the income tax

These numbers are based on a fully implemented plan for two years. In implementing an actual reform package different elements would be phased in at varying times thereby affecting the revenue impact numbers.

Oregon’s Tax Incidence Model (OTIM) – projects that jobs and investment will be higher after the economy adjust to the new tax system. The basic reason for this is that personal income taxes depress state economic activity more than consumption taxes.

This does not mean that all sectors will gain- there will be some downsizing – for example border retail trade activity– but in net the state’s long term economic model is showing that the economy will be better off in terms of both jobs and investment.

Continuous ImprovementReduce Cost

Improve Quality

Change Bureaucratic Culture

Track Expenditures/Measure Performance

What You Can Do

Give feedback on the items that impact small business.

During the legislative session- testify at hearings, call your elected officials, and encourage other small businesses to do the same.

Thank you

Questions & Comments

Your Local Views and Future Actions:

How does this impact your cities?How can we best work together to

implement change?

What are your small businesses saying?

Getting Feedback: On-line questionnaire

2007 Legislative Session: Working together

Coos Bay

September 20th:WelchesNovember 8th: Salem

Upcoming Meetings

Senate Comm. on Healthcare Access & Affordability: August 18th in WilsonvilleJt. Interim Committee On Econ. Development: Aug. 17th in AstoriaOregon Innovation Council: September 7th in PortlandOECD Commission: Nov. 3rd in Bend/Redmond

We Want To Hear From You…

We encourage you to participate in the on-line questionnaire @

http://www.oregon-smallbiz.com(Results will be reported to Governor.)

Or email us at:

oregon.smallbiz@state.or.us

Thank you!