The state of San Diego's small business owners

A new poll reveals that San Diego's small business community sees brighter economic days ahead, but remains tight fisted and cautious about the future. If local government officials take new steps to address the needs of business, they can stimulate capital spending and job creation when they're needed most.

At issue is the Union Bank's 11th Annual Small Business Economic Survey, which interviewed 2,892 business owners in California from Jan. 10-28. Examining the sub-sample of 504 San Diego County respondents, pollsters found that regional business owners feel optimistic about the future and their bottom line. Nearly two-thirds (64 percent) believe they will see greater profitability this year. This sunny disposition is unique to San Diego. According to the survey data, more business owners in San Diego County (45 percent) reported greater year-to-year sales in 2010 than in any other county in California. The majority of business owners here (59 percent) also believe that their business will have experienced an economic recovery by the end of 2011.

Still, most small business owners are planning to hold the line this year. Breakout data from the Union Bank survey finds that county small business owners are mostly guarded about their finances -- 69 percent plan to maintain the same staffing levels from 2010, and 60 percent also intend to keep capital expenditures at the same level as last year.

If businesses choose not to expand this year, the reasons won't be limited to recessionary woes. The Union Bank survey identified the government as a growing hindrance to running a business in the Golden State.

San Diego business owners rated state and local business taxes as the top challenge in running a business in California (40 percent), narrowly edging out the state economy (39 percent), which has been the top rated issue locally since at least 2009. Statewide, respondents ranked state and local business taxes as the second biggest challenge. Red tape headaches are also a concern. For the first time since 2006, local survey respondents rated state and local business regulations among the top three challenges.

Clearly, San Diego's elected officials have a mandate to make our fees, taxes, and municipal code more business-friendly, but where to start?

When San Diego County small-business owners were asked to identify their top business needs, poll respondents indicated their desire for the government to focus on cutting business taxes (66 percent) and providing temporary tax incentives for small businesses (37 percent). Facing a $57 million budget deficit in the next fiscal year, San Diego City officials will have few tax incentives to offer business owners. A new approach will be needed.

One member of the San Diego City Council has already taken decisive steps this year to address the needs of small business owners. Newly-elected City Councilmember Lorie Zapf has held a series of "small business advisory summits," soliciting feedback from business owners on which services work and which do not at City Hall. At her April summit in Mission Valley, many attendees shared their frustrations with city permits, commercial and zoning laws. Zapf announced that she was working with her colleagues on a small business legislative package, to provide business owners regulatory relief and foster common sense changes to how the city government interacts with businessmen and women. The legislative package is expected to be introduced at Council in the coming weeks.

Kudos to Councilmember Zapf for being proactive on such an important issue, and working in a collaborative fashion to assist small business owners. It's unknown what reforms will be included in Zapf's legislative package, but she should consider allowing small business owners a central, permanent role in cutting red tape.

From 1993-2000, special public hearings known as "Regulatory Relief Days" were held in the city of San Diego, giving residents and business owners an opportunity to share their horror stories with municipal bureaucracy. Critically, the popular program institutionalized the routine annual review and repealing of onerous and obsolete city regulations. With bipartisan support, Regulatory Relief Days resulted in more than 60 regulations being changed or eliminated, such as the ban on child care centers in residentially zoned areas. Other notable achievements from the program include modernizing the city's fire code, trimming zoning laws by 140,000 words (more than a third), and reducing the time to receive a business permit in half.

Let's put San Diego's small business owners back in the driver's seat at City Hall. A lot has changed in San Diego since the last Regulatory Relief Day was held, and many new practices and technologies have rendered laws obsolete. Bureaucracy costs money, and in this recession, we can't afford to lose one dollar.

As Councilmember Zapf explained, "San Diego is in desperate need of a regulatory spring-cleaning. The excessive burdens placed on businesses are hampering growth and strangling the economic engine that drives our city."

Here's hoping the other City Councilmembers get the message as well.

Vasquez is the senior policy analyst at the National University System Institute for Policy Research.

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2 UserComments
Michael 9:41pm April 25, 2011

It's very plain and clear but everyone seems to be in denial. The overhead of the city is out of control. The payroll is too As an example; At the convention center it costs about $89.00 per hour to hire someone to help you on the uniion floor. But the worker is getting paid either $15 per hour for newly hired workers or a maximum of $45.00 per hour for the veteran workers. Except there are more lower paid than higher paid on the floor. But even with the $45.00 per hour guy where does the other $44.00 per hour go? How about the $15.00 per hour guy? Where does the other $74.00 per hour per employee go? Until this is straightened out the problem will only get worse thatnks to these greedy Union leaders and the politicians who won't mess with them out of political fear for their own position or maybe even their lives. They dug this hole way too deep and now the only way out of it as far as I can see is deflation. Deflate pensions and wages.

Wendy Zamutt 6:18pm April 25, 2011

As a Small Business owner in San Diego one of the problems we have with the San Diego County Jails are their PCS Collect Call phones. The inmates that just arrive have a limited amount of free calls. The majority of the calls come in collect from the jails. PCS/ILD Services charges a SINGLE BILL Monthly Statement fee of $2.49 and $1 per minute for phone calls. The phone calls are recorded. The bottom line is with the high costs of collect calls from the jails how can a bail bond agency afford to keep taking these calls? The average phone call to arrange a bail bond is 20 minutes. Bail Bond agencies should be extended a small business courtesy in San Diego and be allowed to receive FREE calls from inmates. Currently there is no break or discount on collect calls from the jails for small business owners such as myself. Help us stay in business so we can continue serving this county like other Small Business Owners.