Public Policy Platform
MetroIBA Public Policy Platform
Public Policy Platform to Strengthen Minnesota’s Locally-owned Independent Businesses
Contrary to conventional wisdom, the significant hardships experienced by independent businesses often are not the result of free markets and consumer choices. Public policy at all levels of government has played a major role in tilting the playing field in favor of giant corporations — often at the expense of America’s independent small businesses.
The following Public Policy Platform to Strengthen America’s Independent Businesses was produced by the Metro Independent Business Alliance based on the platform of the American Independent Business Alliance.
Independent businesses have long been the backbone of the American economy. They play a critical role in:
- Keeping the American Dream alive. For generations, starting a small business has been a means by which families have pulled themselves out of low-wage jobs and into the middle class.
- Building strong communities. Studies show that small businesses contribute more of their revenue to charitable causes than big businesses. In addition, the care they demonstrate for their employees often exceeds the basic requirements of government regulation.
- Countering sprawl, reducing traffic, and enhancing quality of life. Independent businesses tend to favor locations in neighborhood business districts. These areas create far less demand for public infrastructure and services compared to auto-dependent developments and, as a result lessen the burden on local taxpayers.
- Strengthening local economies. Local businesses re-spend a much larger share of their revenue within the local economy compared to national chains, creating more jobs and opportunities.
- Protecting consumer interests. A marketplace of tens of thousands of locally-owned independent businesses is the best way to ensure innovation, broad product choices, and competitive prices over the long-term.
- Ensuring long-term economic stability. Communities with many small businesses and a large degree of self-reliance are more diversified and stable than those dependent on a few large firms, and less vulnerable to distant economic forces.
To level the playing field and allow small businesses to flourish, we advocate the following (organized in alphabetical order):
Strengthen and enforce laws that prohibit predatory pricing and price discrimination.
Preventing the largest retailers from misusing their size and market power to gain an unfair advantage over smaller competitors is essential to protecting consumers and ensuring independent businesses an opportunity to compete. By selling certain lines of goods below cost for a prolonged period, large retailers can force small businesses to close. Consumers ultimately suffer; once competitors have been eliminated, prices are likely to rise. Increased monitoring and enforcement of state predatory pricing laws will help maintain fair and vigorous competition.
Business District Revitalization
Develop a long-range, comprehensive business district revitalization and small business development plan, and ensure that transportation and infrastructure policies support locally-owned business growth.
Cities should focus their economic development resources on creating and expanding small businesses, and they should develop long-range plans to revitalize their core business districts. Transportation, infrastructure, and other municipal policies should support theses districts, including downtowns. Transportation planning should include bicycle transportation and pedestrian improvements.
Support and strengthen the Community Reinvestment Act.
For decades the Community Reinvestment Act (CRA) has successfully contributed to the economic vitality of local communities by requiring certain federally insured banks to invest inside the communities in which they conduct their banking. Locally-owned, independent businesses benefit directly from the CRA in the form of small business loans, and they benefit indirectly by having more prosperous local residents to whom they can sell their products and services. The CRA’s impact has been severely diminished in recent years by shifts and changes to the banking and finance industry, including the same deregulation that led to the housing crash of 2008. We support expansion of the CRA, not further reductions or elimination.
City and state development subsidies and tax incentives should be available to a broad range of developers who serve small and locally-owner independent businesses and revitalize neighborhood commercial districts. These subsidies should be used to improve and build the tax base. Tax increment financing should be used judiciously to seed development in commercial districts for terms of no more than 10-12 years, to ensure it serves its purpose of strengthening the tax base.
Cities commonly provide tax breaks and other kinds of subsidies to underwrite the development of big-box retail stores. Wal-Mart, for example, has received over $1 billion in public subsidies from state and local governments, according to a report by Good Jobs First. These subsidies not only create an uneven playing field for locally-owned independent businesses, but studies have found that big-box stores produce no real growth in the local economy and actually eliminate as many jobs as they create.
Abuse of tax increment financing in Minnesota has actually depleted the tax base in municipalities where it has been used. For example, Saint Paul’s Lawson tax increment project, in the early 1990s, displaced long-time locally owned independent businesses, and never fulfilled its promise of strengthening the local tax base.
Support and fund comprehensive revitalization and small business development programs.
In many cases, economic development programs are focused on trying to attract outside corporations. More attention needs to be paid to helping new entrepreneurs get started and survive; and to supporting the expansion of small businesses. States and cities should direct more of their economic development resources toward local business development in order to prevent the mass displacement of community-based businesses by national and international chains. They also should review comprehensive revitalization programs, infrastructure and transportation policies to ensure they do not undermine the health and vitality of local businesses.
Support state and local policies promoting cooperation by all stakeholders in providing the resources and opportunities necessary for workforce development.
The success and long-term competitiveness of any business is directly linked to its ability to access a quality and able workforce. In an increasingly global economy, businesses are better able to succeed if workers have access to education and training to fill more specialized jobs. Small business owners do not have the resources to provide all of the necessary training and education. It is imperative that state and local communities recognize that their ability to retain and grow local businesses is directly tied to their commitment to workforce development and education.
Ensure that Eminent Domain is used for providing legitimate public uses, not for the benefit of national or international corporations.
The power of government to take private property for public use (such as the construction of a school), provided the owner receives fair market value, has been increasingly abused in recent years. In numerous cases, local governments have seized homes and small businesses not for legitimate public uses, but rather to transfer the property to a chain retail developer. The Minnesota Legislature changed the state law in 2006 to include that “eminent domain may only be used for a public use or public purpose”, and further clarifies that the “public benefits of economic development, including an increase in tax base, tax revenues, employment, or general economic health, do not by themselves constitute a public use or public purpose” We support this legislation and would oppose attempts to weaken its provisions.
Finance, Capital and Credit
Enhance the flow of credit and capital to small businesses.
To generate sustainable economic growth, small businesses need access to capital that is faster, easier and more flexible than is currently available. This includes streamlining and expanding SBA application approvals, expanding SBA investments to include small-equity and equity-hybrid instruments, and reducing and simplifying securities regulations for small investments in independent businesses.
Further, because the vast majority of small businesses use credit cards at some point during their life-cycle (many do so chronically), we support reasonable credit regulations such as clear disclosure of terms, term change restrictions, and interest rate and fee caps.
Support reforms that will deliver affordable, quality healthcare to all citizens and will ease the burden on small businesses.
The cost to buy and administer health benefits is a significant barrier to startup and hiring — costs that foreign competitors do not face. Small businesses are especially disadvantaged by our system, because their size prevents them from obtaining competitive pricing on quality insurance plans, which makes them vulnerable to serious cash flow issues, large increases in expenses and workforce instability.
Promote tax policies that are simple in administration and compliance, and that encourage economic growth fairness between large and small businesses.
Entrepreneurs and small business owners face complex and ever-changing tax rules and burdens at both the state and local level. These burdens inhibit startup and growth of small businesses. Local and state policies often disproportionately favor large companies. Lack of fairness in these policies puts small businesses at a competitive disadvantage in the marketplace.
Reject any international trade treaty that prohibits cities and states from favoring local businesses in government contracts and purchases and give preference to locally-owned business in awarding contracts.
A number of cities and states have enacted policies that give preference to local businesses when awarding government contracts, provided the bid from the local business is within a certain range of the lowest bid received. Provisions in some proposed international trade agreements could overturn these preferences.
Provide incentives to encourage neighboring communities to collaborate on land use planning; to develop a joint process for reviewing developments of regional impact, including large-scale retail projects; and to implement tax-base sharing.
Competition for tax base among neighboring communities and the lack of a regional approach to land use planning has led to massive over-building of big-box stores in most areas of the country. Many large retail projects are approved without any consideration of regional impacts, including vacancies in downtowns and other shopping areas. Developers often play neighboring towns against one another to exact tax breaks and other concessions. One solution is increased cooperation among neighboring communities through regional land use planning, development review, and tax-base sharing.
Support state and federal legislation requiring all businesses to comply with state and local sales tax regulations and in a manner that eases compliance burdens on small business.
Federal policy currently prohibits states and communities from requiring internet and mail-order companies to collect the same sales taxes that local retailers are required to charge, unless the company maintains a physical presence in the state. This policy gives out-of-state companies a five-to-ten percent price advantage (sometimes even higher) over brick and mortar businesses in most tax districts.
Zoning and Planning Policy
Support planning and zoning policies that support downtowns and community based business districts, encourage the proliferation of small-scale independent businesses, and discourage or limit big-box sprawl.
Cities should adopt planning policies that discourage commercial sprawl, such as store size caps and transparency in the community involvement. Planning policies should support and encourage small-scale, community-serving businesses that locate downtown or in established neighborhood business districts.