RD175 - Executive Summary of the 2017 Interim Activity of the Virginia Small Business Commission

    Executive Summary:

    Pursuant to the powers and duties authorized under § 30-183 of the Code of Virginia, the Virginia Small Business Commission (the Commission) held three meetings during the 2017 interim.

    I. Meetings

    July 25, 2017

    The Commission held its first meeting of the 2017 interim on July 25, 2017, in Richmond, Virginia, in House Room 1 of the State Capitol. The meeting began with an overview of the findings of the 2016 update of the Joint Legislative Audit and Review Commission (JLARC) study reviewing the impact of regulations on Virginia's manufacturing. Ellen Miller, Chief Economic Development and Quantitative Analyst with JLARC provided the overview. Ms. Miller began by presenting background for the initial 2005 study that directed JLARC to estimate the cost of compliance with federal and Virginia regulations, compare Virginia's regulations affecting the manufacturing sector to the regulations of other mid-Atlantic and southern states, and compare state regulations affecting manufacturers with those affecting other business sectors. The study focused on four regulatory areas: economic, environmental, workplace, and tax.

    The Commission also received an overview of the survey conducted by the Joint Commission on Administrative Rules (JCAR). It was noted that the survey was in the context of several legislative efforts during the 2016 and 2017 sessions aimed at reducing the overall regulatory burden on businesses and to provide stronger legislative oversight of the regulatory process. The online survey sought the perspective of the business community regarding the state's regulatory burden and consisted of 37 questions, generally inquiring into (i) the extent of the regulatory burden on the business, (ii) the principal areas of regulation having the most impact on the business, (iii) an assessment of the permitting process, and (iv) any specific regulatory issues impacting businesses. A total of 111 surveys were completed.

    October 25, 2017

    The Small Business Commission held its second meeting of the 2017 interim on October 2, 2017, in Richmond, Virginia, in House Room 1 of the State Capitol. The meeting was called to order by Chair Delegate Daniel W. Marshall, III at approximately 1:00 p.m. Delegate Tony O. Wilt was elected Chair and Senator Frank M. Ruff was elected Vice-Chair. The Commission received a presentation on the history of Senate Bill 1130 (2017). The bill would change the definition of "small business" in the Code of Virginia to match the size standards established by U.S. Small Business Administration (SBA) regulations. Under current law, a small business is one that is at least 51 percent independently owned and has 250 or fewer employees or average annual gross receipts of $10 million or less. In comparison, SBA regulations establish different thresholds for different industry sectors.

    The Commission also reviewed two bills referred for study by the House Committee on Commerce and Labor. House Bill 2419 (2017) would require call centers with at least 50 employees to notify the Commissioner of Labor and Industry if they moved their operations from the state to a foreign country. House Bill 2413 (2017) would prohibit the Virginia Apprenticeship Council from adopting standards for apprenticeship agreements governing the numeric ratio of journeymen to apprentices that require more than one journeyman for two apprentices. After hearing presentations on each of bills, the Commission took no action.

    In addition, the Commission received reaction from the Virginia Manufacturers Association and the Virginia Chamber of Commerce to the findings of the 2016 update of the JLARC study reviewing the impact of regulations on Virginia's manufacturing sector.

    December 7, 2017

    The Commission held its third meeting of the 2017 interim on December 7, 2017, in Richmond, Virginia, in House Room 1 of the State Capitol. The meeting was called to order by Chair Delegate Tony O. Wilt at approximately 10:10 a.m.

    Tracey Wiley of the Department of Small Business and Supplier Diversity (SBSD) gave an overview of previous legislation related to which companies qualify as small businesses and provided background information on how Virginia's small business certification program interacts with similar programs in other states. She noted that there are 11 "blackout," or nonparticipating, states. These states do not allow preferential treatment for businesses that qualify as small, women-owned, or minority-owned, so Virginia does not allow businesses from those states to qualify for preferential treatment in Virginia.

    Brett Vassey of the Virginia Manufacturers Association distributed to the members a report authored by the Virginia Industry Foundation entitled A Virginia Vision for a More Competitive Manufacturing Future. The report contained methods for measuring costs of compliance and metrics for measuring Virginia's competitiveness. Vassey reviewed the different indices, 52 in total, that fell under each metric. He noted that the report weighted various metrics more heavily, on the basis of discussion with the manufacturing community. Their feedback suggested that business climate is the most important metric and workforce is the second most important.

    Stephen Moret of the Virginia Economic Development Partnership (VEDP) provided status report on evaluation of economic development incentives. Mr. Moret suggested a different paradigm for thinking about how to differentiate between types of small businesses: traded and nontraded. He defined "traded" businesses as those that generate sales from out-of-state customers and "non-traded" businesses as those that provide services mainly to local customers. The economic success of nontraded businesses is linked closely to the local business climate, and this type of business represents the majority of small businesses in Virginia and most other states. According to Moret, traded businesses are motivated to respond to incentives such as workforce grants or job creation incentives.

    Moret reviewed the results and recommendations of the agency's 2016 sustained growth study. He also described VEDP's economic gardening pilot program focusing on second-stage growth of small businesses, targeting expansion rather than survival. The program is for companies that already have an established record of success. Moret outlined the criteria that VEDP used to choose candidates for the pilot program.

    II. Legislation

    The Commission did not endorse or recommend any legislative proposals for the 2018 session.

    Additional information regarding the Commission's activities is available through its website at: http://dls.virginia.gov/commissions/sbc.htm

    The Commission submits this executive summary of its 2017 activities as its annual report.