The Empire Page

Background:  You cannot follow the news these days without coming across stories that impact the small business community – whether we're talking about credit, jobs, energy and/or healthcare costs, taxes or even who should be allowed to sell certain products in their stores.  These events have made for busy times for the state affiliate of the National Federation of Independent Business (NFIB).  We interviewed Mike Elmendorf, NFIB's New York State Director, to find out what issues NFIB members feel are important and how they handle situations where members find themselves on opposing sides of an issue.

 

Q#1: Give the Empire Page readers a little background on NFIB.  How long has it had a presence in NYS and who are its members?

A: Founded in 1943, the National Federation of Independent Business (NFIB) is New York and the nation’s leading small business advocacy organization.  We have approximately 11,000 members across New York, hailing from every county and borough in the state, and engaging in just about any kind of business you can imagine.  They range from sole proprietors who might be running a business out of their home, to individuals running mid-sized manufacturing operations with a global client base, to large, but privately held companies that have thousands of employees—and everything in between.  Our members are New York’s entrepreneurs and job creators, and are truly extraordinary people who have shown the grit and determination required to successfully run their own business—particularly here in New York State, which has one of the most challenging business environments in the country.  It is truly a privilege to represent them and fight on their behalf here in Albany and in the halls of Congress.

 

Q#2: How is NFIB organized in New York?  Do you have local "chapters"?  How do members participate in setting policy for the organization?

A: We are the statewide chapter of a national organization--recognized as one of the most powerful and effective organizations in the country.  Around the state, we have a number of what we call "Area Action Councils."  The Area Action Councils are groups of some of our involved members--grassroots activists--around the state.  We meet with them several times a year in Buffalo, Rochester, Syracuse, Utica, Oneonta and Long Island.  These meetings give us an opportunity to give our members a more in-depth view of what's going on in Albany and in Washington that could impact their business--and how they can be more involved to influence policy in a more pro-growth direction.  We also use these forums to bring valuable information that might help them and their business in other ways.  For instance, last year we partnered with the New York State Energy Research and Development Authority (NYSERDA) and Direct Energy (an energy service company) to inform our members about how better energy efficiency and the ability to choose their energy provider could benefit their bottom lines.

NFIB is a very member-driven and member-focused organization, and our members truly do establish our policy.  This is done through our "Member Ballot," which gives each member a chance to vote on key issues facing small business both in Albany and Washington.  Unique to NFIB, this gives each member--regardless of size--an equal voice in determining the organization's policy on major issues.

Q#3: When's the last time you surveyed your members about the issues that are most important to them and what did they tell you?

A: We routinely survey our members on key issues we think will be confronting small business, both here in Albany and in Washington, as NFIB is truly a member-driven organization.  This takes the form of our annual “Member Ballot,” getting the views of our members on a range of issues we see on the horizon, as well as special ballots as issues arise throughout the year.

Last year, among the issues we asked our members about were proposals to mandate paid family leave on every employer in the state—regardless of size—and to not only increase New York’s minimum wage, but to index it, all but ensuring that New York’s minimum wage (and cost of doing business) continue to be higher than that of neighboring states.  Not surprisingly, NFIB members overwhelmingly opposed both of these proposals.  We also asked them about the Governor’s property tax cap proposal, and more than 80% of those responding supported it.  This, too, is no surprise, as New Yorker’s contend with the highest property taxes in the nation.  Many small business owners get whacked twice by astronomical property tax bills, both at their business property and again at home.  In fact, property taxes are the single largest tax on business in New York.

This year, we asked our members their views of proposals to increase personal income tax rates, increase the taxable wage base on which employers pay unemployment taxes, and expand prevailing wage laws.  We also asked them about imposing a state spending cap and a property tax circuit breaker.  NFIB members are still voting their ballots for this year, and we await the results.

As I mentioned, we also do special ballots as issues come up.  One of those was the proposal contained in the Executive Budget to allow the sale of wine in grocery stores and other retail locations that currently sell beer.  As you can imagine, this was a tough issue for us, as we represent all kinds of small and independent businesses—liquor stores, grocery stores, convenience stores, wineries, and farmers.  So, needless to say, we had members all over on this issue.  As difficult as the issue was, it’s also an illustration of how well our process works.  We posed the question to our members, and 67% percent of them told us they were against the proposal.  Only 30% supported it.  Many of them voiced concern about the impact that it would have on liquor stores—all small businesses—who would be hard-pressed to adapt or compete in such a vastly transformed market place.  And so, as we do, we took our marching orders from our members and have been opposing this proposal.

Q#4: The wine sales issue is causing all kinds of conflicts within the business community. For NFIB you chose "democracy" -- i.e., letting your members decide -- versus "principal" -- supporting free enterprise versus allowing government to control what businesses can do.  Is the primary reason for a business to belong to NFIB your role as lobbying on behalf of the issues the majority of the members favor?  If so, how do you differ from the Business Council and Chambers of Commerce?

A: I’m not sure I would agree with the characterization that our process and position on this particular issue represents a choice between “democracy” and “principle,” as you put it.  In fact, I think you’d be hard pressed to find an organization that stands more firmly on its principles than NFIB.  Our mission is to promote and protect the right of our members to own, operate and grow their businesses.  Certainly, on this issue, you have small business owners on both sides, but when it came down to it, most of them viewed it as a proposal that would very likely put many liquor stores out of business. 

By virtue of the state’s alcoholic beverage control law, all liquor stores are small businesses. They started their businesses on the basis of a marketplace that was established by New York State law, and they are really only able to sell two products:  wine and liquor.  The majority of our members felt it would be unfair to change the rules mid-stream, changing the marketplace in such a way that liquor stores would very likely be unable to compete.  We received many comments from our members in the course of this process, and there were those who took the perspective that the government should not be telling businesses what they can and can’t sell, but they were plainly in the minority on this one.  Most of our members viewed this as a proposal that would be bad for small business, and that’s reflected in the position they ultimately took.  And, although we represent a number of liquor stores, they are just a part of our very broad and diverse membership.  So, this really was an instance of other small business owners in unrelated businesses looking at this as something that really could potentially put the “little guy” out of business.

I think all membership organizations seek to represent the views of their members, and they all have a process for how they determine those views.  Of course, that process may differ, and it’s not my place to comment on how other organizations do that.  We work very closely with the Business Council, many Chambers of Commerce and others in the business community on a wide range of issues, and although some of us may disagree at times, I think that’s the exception and we need to stick together.  And generally we do. 

In our case, our process is the member ballot, and I think it works well and is fair in that it gives all members an equal voice, regardless of their size.  It ensures that our positions on major issues are consistent with those of a majority of our members, and makes certain they have direct input into that process.  How we arrived at our position on the wine in grocery stores proposal is a good example of that.

Q#5: In honor of Small Business Day, the Assembly passed a package of 11 bills designed in their words to help "small businesses be competitive, productive and profitable."  One of the primary bills in their program would help businesses become more energy efficient by offering "zero and low-interest-loan programs" to businesses.  How does NFIB feel about that proposal and the rest of the Assembly's package?

A: We supported that particular bill and many of the others that the Assembly passed in conjunction with Small Business Day.

In terms of the bill you mentioned, small business owners are troubled by their rising energy costs.  In NFIB’s most recent Small Business Problems & Priorities Report, electrical rates were ranked among the top ten issues confronting small business.  In New York, our energy costs are the third highest in the nation.  Our electrical rates are nearly 50 percent above the national average.  Energy costs in New York are a significant factor contributing to our second-highest in the nation cost of doing business. 

NYSERDA’s existing programs help small business owners cope with those costs by identifying energy inefficiencies and helping them take steps to improve energy efficiency through adoption of technologies that can reduce their energy costs and usage.  These programs have been successful in the past, and NFIB has partnered with NYSERDA to make New York’s small business owners more aware of the opportunities they present.  This legislation would expand these programs by making them more readily available in economically distressed areas.

We appreciate the efforts of the Assembly to advance bills like those they passed to recognize Small Business Day.  The over-arching issue, of course, is New York’s high cost of doing business.  For that reason, the main focus of Small Business Day was opposition to the staggering array of tax and fee increases included in the Executive Budget—more than $4 billion, all in.  These would increase costs on virtually every business and individual in New York, and are exactly the wrong policy at the wrong time.  Small business owners told the Legislature so on Small Business Day, and we were pleased to see the Governor and legislative leaders respond by removing some $1.3 billion of these proposals from the budget. 

That’s a good start, although we remain concerned about many of the remaining proposals.  For instance, there are still nearly $1 billion in increased taxes on health insurance premiums.  Although these tax hikes target insurance companies, they will be passed on, dollar for dollar, to premium payers, also known as our members—small business owners and their employees.  They simply cannot afford that.  Health insurance premiums have gone up more than 100% over the last eight years.  It is unsustainable.  These actions, on top of the health insurance tax increases included in the deficit reduction package would increase health insurance premium taxes by a third.  According to some, this could lead to as much as a $300 annual increase in the average health insurance premium.  This will do nothing more than drive up the ranks of the uninsured.

That said, most small businesses—about 75% of them—report their business income on a personal income tax return.  Even as net income, when you’re talking about a household, with small business income, that’s not necessarily a hard threshold to hit.  And, let’s remember here—that’s business income, not personal income.  That business owner doesn’t go home at the end of the year and spend or invest that money personally; that’s the operating capital of that business.  So, this proposal, especially at the $250,000 level, is going to be a tax increase on many small business.  It will reduce their operating capital, which will in turn reduce their ability to hire, expand or buy new equipment—and in some cases, even survive. 

This is exactly the wrong policy for New York, and at especially the wrong time, given the economy.  We didn’t get into our current fiscal mess—an unbelievable $50 billion deficit over the next several years—because taxes have been artificially low in New York.  Quite the opposite, our taxes are the highest or second highest in the nation, depending on who you ask and when.  Simply put, we’ve been spending too much, way too much.  And, our taxpayers—businesses and individuals alike—cannot longer afford it.  Don’t just take my word for it; New York loses more than 200,000 people a year, and it is not just because of the weather.

We need to fundamentally change the way we budget and spend money in New York, not just keep raising taxes.  It will shrink our economy, and drive even more people and jobs across our borders.

Q#7: What facts about New York's small business environment are important for Empire Page readers to keep in mind as New York State works through the current economic crisis?

A: They need to remember that small business is the engine that drives our economy.  It provides most of the private sector employment in New York, and nationally is responsible for most of the new job creation.  It is small business that will lead us out of the current economic turmoil we’re experiencing, but only if we let small business owners do what they do best:  grow their businesses and create jobs.  They can’t do that if they are saddled with even higher taxes, new mandates and additional burdens and costs.  That’s why we need to pursue pro-growth policies in our country and particularly in New York.  Unlike a lot of other constituencies in New York, our message to Albany is a lot different.  We’re not asking for more; we’re largely asking to be left alone.  We’re asking government to get out of our way and let small business thrive.