Kentucky Governor Gives Small Business Owners More Clout, Louder Voice with New Law

LOUISVILLE, Ky. – The incentive for Kentucky credit unions to offer SBA loans looks more attractive thanks to new legislation signed by Gov. Ernie Fletcher. Gov. Fletcher just signed into law the Small Business Regulatory Fairness Initiative, which will require state agencies to consider their impact on small business before they issue final regulations. Similar to the federal Regulatory Flexibility Act (RFA), it implements elements of small business friendly regulatory legislation put forward as a model by the Office of Advocacy of the U.S. Small Business Administration. State Representatives’ Roger Thomas and James Comer co-sponsored the bill. “Kentucky’s small business owners now have a seat at the table when regulatory decisions are made,” said Thomas Sullivan, SBA chief counsel for advocacy. “When their voice is heard, better decisions are made, and that means more jobs and growth for Kentucky.” Specifically, the new law says the Kentucky Commission on Small Business Advocacy (KCSBA) can formally comment after reviewing administrative regulations that may impact small businesses and report whether a regulation would harm the success or growth of a business. The KCSBA has 27 small-business representatives nominated by business and trade associations and appointed by the governor. Under the new law, state agencies must e-mail a copy of the administrative regulations that may impact small businesses to KCSBA. In the legislation, a small business is defined as one with fewer than 150 employees or less than $6 million in annual revenue. The newly-signed law also allows agencies to use the waiver of fines or other penalties for noncompliance when tiering administrative regulations to lessen the impact on small businesses and allows the Administrative Regulation Review Subcommittee to declare a regulation deficient if it imposes an unreasonable burden on small business, said Bobby Clark chairman of KCSBA. Clark said “small businesses are the backbone of Kentucky’s economy” with 97% of Kentucky’s businesses have fewer than 100 employees. They generate more than half of the annual $34 billion dollar private sector payroll, and more than 50% of Kentucky’s private sector employees are employed by small businesses. This legislation “forces the cabinets to allow small business to come forward when they have a problem,” said Jim Host KCSBA executive director testified during the state’s House Economic Development Committee meeting earlier this year. KCSBA estimates that Kentucky small businesses pay $9.1 billion each year to comply with federal regulations. Small businesses must pay on average almost $7,000 per employee per year to comply with federal regulations, Clark said. This figure does not include state and local regulatory compliance costs. The KCSBA estimates that if the regulatory burden on Kentucky businesses were reduced by 5%, employers would have an additional $450 million to invest in job creation, health care and business expansion. Clark said the KCSBA can accomplish the goal of reducing regulatory compliance costs by ensuring regulations are common sense and achieve their goals efficiently; changing the regulatory culture so that we are helping small businesses become compliant, not looking for opportunities to punish; and using cost analysis to determine the impact of regulations on small businesses before new regulations get on the books. The KCSBA said it will continue to work with small businesses and trade associations to identify regulations that need to be reviewed and encourage state agencies to consider compliance alternatives for small business that are less costly. Kentucky joins Wisconsin, South Carolina and six other states that have recently passed small business regulatory flexibility legislation, according to Sullivan. Similar legislation is pending in 12 states. [email protected]