COMMENTARY | COLUMNISTS | CARL DEMAIO

Promoting small business starts with lower taxes

As a businessman, I know firsthand the difficulties of owning and running your own business.

Small businesses are the backbone of our local economy, comprising 92 percent of businesses in the city of San Diego. Given their significant economic impact, supporting small businesses is critical. Furthermore, experts will tell you that economic recoveries start with the small business sector. They are often the first to start hiring, and they are also the first to make capital purchases and new investments.

In an effort to promote small businesses my office has held a series of town hall forums where business owners and trade organizations discussed challenges faced by small businesses in the city of San Diego. These meetings have led to a series of recommendations on how San Diego can support small businesses to grow and prosper.

Unfortunately, many elected officials at City Hall are focusing their efforts on creating a more hostile small business environment by placing a $103 million per year sales tax hike on the November ballot.

Higher taxes and fees only increase the operating costs of small businesses, making it harder to compete with businesses outside the city boundaries. Potential customers will also choose to purchase certain goods in surrounding municipalities, many of whom have a lower sales tax rate than San Diego would with this proposed increase.

The city of San Diego is also woefully behind the times in using the Internet to interact with small businesses. The city's website provides limited information to help business owners decide what city, state and federal regulation or permit the need for their business.

During one of our forums, we heard from a business owner who had to take a day off from work to physically go to City Hall in order to apply for permits. Simply placing the necessary documentation online would have saved this individual, and many others like him, the time and hassle of coming downtown.

Cities such as Sacramento and Los Angeles have comprehensive lists of downloadable permits needed online and provide links to important resources to help the small business owner. San Diego should allow business operators to fill out and turn in necessary paperwork online, without having to come to City Hall. We should follow the lead of many and finally step into the 21st century.

Another important step is looking into Small Business Grants. These grants are an important tool for generating funding and advocacy efforts for San Diego's small businesses. Unfortunately, grants have been spread too thin, slowing their ability to have a meaningful impact.

After thorough review, my office has recommended restructuring the program to ensure a more outcome-based distribution of taxpayer dollars. We must also ensure that funded programs be reoriented to provide funding for specific outcomes in small business assistance that the city wishes to accomplish.

The city can also aid small businesses by ensuring they have easy access to city contracting opportunities. Currently, the city's contracting process forces small businesses to deal with many bureaucratic hurdles just to bid on city work.

The city of San Diego should require all contracts, regardless of dollar amount, to be posted online in an easily searchable format. Currently, contracts less than $50,000 are not required to be posted online.

Further, we should also look into streamlining the bidding process by reforming the vendor and application process. An online application process would reduce the need for businesses to provide duplicative information and ease the workload on small businesses and city staff.

Many small businesses do not qualify to bid for city contracts because of excessive qualifying standards. The city should reform requirements that are in excess of private industry standards to provide more inclusiveness for small businesses.

Making the city of San Diego the most small-business-friendly city in America is a goal worth pursuing. The most important thing the business community can do in the short term is to remain steadfast in opposition to any tax increases. Sales tax increases will drive away consumers to other cities and delay the momentum for necessary reform of city government.

At a time of deep economic turmoil, removing hindrances to small businesses is critical to achieve a sustainable financial recovery. Many San Diegans are in need of jobs to support their families, and I urge the mayor and City Council to pursue these reforms in an effort to support small businesses and job creation.


DeMaio is a member of the San Diego City Council, representing Council District 5.

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1 UserComments
Brian Marvel 2:45pm August 30, 2010

I have noticed that Councilmen DeMaio and Faulconer along with the Lincoln Club and the SD Republican Party have been completely silent on SDG&E’s 7% rate hike. Doesn’t small business need public safety to thrive? For the last 10 years, the City has been slowly decimating public safety; where fire stations are being browned out and the police department has moved to more telephone and internet reporting of crime. Doesn’t this affect insurance rate? Wouldn't you be concerned?