[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]




REMOVING OBSTACLES TO JOB CREATION: HOW CAN THE FEDERAL GOVERNMENT HELP 
               SMALL BUSINESSES REVITALIZE THE ECONOMY?

=======================================================================

                                HEARING

                               before the

      SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT & GOVERNMENT PROGRAMS

                                 of the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                     WASHINGTON, DC, APRIL 21, 2005

                               __________

                           Serial No. 109-12

                               __________

         Printed for the use of the Committee on Small Business


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house


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                      COMMITTEE ON SMALL BUSINESS

                 DONALD A. MANZULLO, Illinois, Chairman

ROSCOE BARTLETT, Maryland, Vice      NYDIA VELAZQUEZ, New York
Chairman                             JUANITA MILLENDER-McDONALD,
SUE KELLY, New York                    California
STEVE CHABOT, Ohio                   TOM UDALL, New Mexico
SAM GRAVES, Missouri                 DANIEL LIPINSKI, Illinois
TODD AKIN, Missouri                  ENI FALEOMAVAEGA, American Samoa
BILL SHUSTER, Pennsylvania           DONNA CHRISTENSEN, Virgin Islands
MARILYN MUSGRAVE, Colorado           DANNY DAVIS, Illinois
JEB BRADLEY, New Hampshire           ED CASE, Hawaii
STEVE KING, Iowa                     MADELEINE BORDALLO, Guam
THADDEUS McCOTTER, Michigan          RAUL GRIJALVA, Arizona
RIC KELLER, Florida                  MICHAEL MICHAUD, Maine
TED POE, Texas                       LINDA SANCHEZ, California
MICHAEL SODREL, Indiana              JOHN BARROW, Georgia
JEFF FORTENBERRY, Nebraska           MELISSA BEAN, Illinois
MICHAEL FITZPATRICK, Pennsylvania    GWEN MOORE, Wisconsin
LYNN WESTMORELAND, Georgia
LOUIE GOHMERT, Texas

                  J. Matthew Szymanski, Chief of Staff

          Phil Eskeland, Deputy Chief of Staff/Policy Director

                  Michael Day, Minority Staff Director

     SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT AND GOVERNMENT PROGRAMS

MARILYN MUSGRAVE, Colorado Chairman  DANIEL LIPINSKI, Illinois
ROSCOE BARTLETT, Maryland            TOM UDALL, New Mexico
BILL SHUSTER, Pennsylvania           DANNY DAVIS, Illinois
MICHAEL FITZPATRICK, Pennsylvania    RAUL GRIJALVA, Arizona
LYNN WESTMORELAND, Georgia           MELISSA BEAN, Illinois
THADDEUS McCOTTER, Michigan          GWEN MOORE, Wisconsin
JEB BRADLEY, New Hampshire

                     Joe Hartz, Professional Staff

                                  (ii)


                            C O N T E N T S

                              ----------                              

                               Witnesses

                                                                   Page
McClelland, Dr. John, Ph.D., Vice President, Government Affairs, 
  American Rental Association....................................     5
Dean, Mr. Richard, Senior Vice Chairman, Environmental Systems 
  Associates.....................................................     7
Pressly, Mr. David, President, Pressly Development Company, Inc..     9
Wilson, Mr. Donald, President, Association of Small Business 
  Development Centers (ASBDC)....................................    11

                                Appendix

Opening statements:
    Musgrave, Hon. Marilyn.......................................    25
Prepared statements:
    McClelland, Dr. John, Ph.D., Vice President, Government 
      Affairs, American Rental Association.......................    28
    Dean, Mr. Richard, Senior Vice Chairman, Environmental 
      Systems Associates.........................................    31
    Pressly, Mr. David, President, Pressly Development Company, 
      Inc........................................................    37
    Wilson, Mr. Donald, President, Association of Small Business 
      Development Centers (ASBDC)................................    51
Attachments:
    Associated Builders and Contractors..........................    57
    Cline, Mr. Phil, President & CEO, PSG&R Industries, Inc......    66

                                 (iii)
      


 
REMOVING OBSTACLES TO JOB CREATION: HOW CAN THE FEDERAL GOVERNMENT HELP 
                SMALL BUSINESSES REVITALIZE THE ECONOMY?

                              ----------                              


                        Thursday, April 21, 2005

                   House of Representatives
        Subcommittee on Workforce, Empowerment and 
                                Government Programs
                                Committee on Small Business
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 10:07 a.m. in 
Room 2172, Rayburn House Office Building, Hon. Marilyn Musgrave 
[chairman of the Subcommittee] presiding.
    Present: Representatives Musgrave, Westmoreland and 
Lipinski. 

    Ms. Musgrave. I now call this hearing on the Subcommittee 
on Workforce, Empowerment and Government Programs to order.
    Good morning. Thank you all for being here today as we 
examine the potential roadblocks to success for America's small 
business. Specifically we are going to be looking at problems 
either generated or neglected by the federal government that 
prohibit job growth and prosperity in America's small business 
community, along with potential solutions to these problems.
    I look forward to working with all of you, especially our 
distinguished Ranking Member from the State of Illinois, Mr. 
Lipinski.
    I am sure most of you are aware small businesses are the 
driving force behind our economy. They represent 99 percent of 
all employers. More than half of all U.S. employees work for 
small firms, and they generate between 60 and 80 percent of all 
of the new jobs in America.
    Small businesses are the main component in our economic 
engine and we, as your elected officials, must do all we can to 
foster--not hinder--their growth. Running a small business is 
not easy, and what we must do is to relieve some of the burden 
that comes directly from Washington, D.C.
    Unfortunately, Congress and the federal government have 
been fond of passing new laws and imposing mandates and 
regulations on businesses. Congress has been working in recent 
years to diminish that burden, legislation such as the 
Paperwork Reduction Act, the Small Business Paperwork Relief 
Act and more recently the Jobs and Growth Tax Relief 
Reconciliation Act of 2003.
    However, even with the passage of these bills federal 
regulatory tax and compliance burdens continue to be cited by 
many owners as the most significant problems facing small 
businesses. For example, according to a report recently 
published by the SBA's Office of Advocacy, Americans spend $843 
billion complying with federal regulations.
    The average cost per employee of regulations to small 
business is $6,975, which is 60 percent higher than the cost of 
large businesses. To put it another way, Americans spend 8.22 
billion hours to comply with federal paperwork requirements. 
Small business tax forms alone account for 500 million hours in 
compliance time each year. This is time that should be spend 
growing a business or time spent with family.
    It is not just the regulatory burdens that hurt small 
businesses. The health care marketplace is especially difficult 
for small firms. The cost of health insurance has become 
prohibitive for many of America's small businesses and their 
employees. Of the 45 million uninsured Americans, 60 percent 
work for small employers who cannot afford to purchase health 
insurance for themselves or their employees.
    Congress is exploring mechanisms such as association health 
plans, expanding the use of health savings accounts and 
flexible spending accounts and increasing tax credits 
specifically for the purchase of health insurance, all of which 
would help small businesses use market forces to make health 
care more affordable.
    The Tax Code is yet another government intervention 
particularly onerous to small businesses. Despite the 
significant tax relief Congress and President Bush have 
provided to small businesses, taxes are still too high, and the 
Tax Code is ridiculously complex.
    A recent study conducted for the SBA's Office of Advocacy 
found that tax compliance cost $1,200 per employee for very 
small firms versus $562 for large firms. That is a significant 
handicap for a small business as every extra minute spent 
deciphering the Tax Code is one less minute that an owner can 
spend growing his or her business, providing new jobs and 
revitalizing our economy.
    We must continue to strive for lower levels of taxation 
along with simplicity and permanency in our Tax Code. I am very 
eager to hear the testimony today, and I sincerely hope we can 
help further the debate for creative ways the federal 
government can assist small businesses.
    [Chairman Musgrave's statement may be found in the 
appendix.]
    I would now like to yield to the Subcommittee's Ranking 
Member, Mr. Lipinski, for any opening statement that he would 
like to make.

    Mr. Lipinski. Thank you, Madam Chairman. I am honored to be 
serving as the Ranking Member on this Subcommittee, and I very 
much look forward to working with you, working together on this 
Committee.

    Ms. Musgrave. Thank you, Mr. Lipinski.

    Mr. Lipinski. Thank you. Today's small businesses face an 
array of challenges that hinder their ability to do what they 
do best--create jobs. As we have heard time and again, most of 
the net new jobs in this country are created by small 
businesses.
    Unfortunately, the burden of complying with unending 
federal regulations, the soaring cost of health care and the 
difficulties faced in finding and retaining a skilled workforce 
all create significant barriers to success for our small 
businesses.
    The ability of small business owners to start up, expand 
and compete in the world marketplace is diminished if they are 
weighed down with encumbrances that larger businesses or 
foreign competitors do not share.
    One such serious problem is the growing regulatory burden. 
Every witnesses that has testified before the Committee has put 
regulatory burden at or near the top of their list of 
impediments to the vitality of small businesses.
    A recent study shows that for firms with fewer than 20 
employees, the annual cost of regulatory compliance is nearly 
$7,000 per capita. This cost is much higher than that borne by 
larger firms. Small businesses simply do not have the manpower 
and resources to comply with these regulations.
    Recognizing this, Congress created tools such as the 
Regulatory Flexibility Act, RFA, which requires government 
agencies to analyze the impact of regulations on small business 
and to consider less burdensome alternatives.
    Despite much talk about the problem in recent years, the 
cost of rules and paperwork requirements have only increased 
for our nation's 23 million small businesses. We must do more 
to ensure enforcement of the RFA and related tools so that we 
can achieve our goal of reducing the regulatory burden on small 
businesses while protecting the health, safety and fair 
competition.
    Other areas that we will be hearing about today are equally 
daunting. The rising cost of providing health care coverage is 
an enormous challenge for small business owners. With less 
bargaining power, small firms pay even more for coverage than 
do large firms. Costs have risen to such an extent that it is 
now a major cost factor for businesses that offer health care 
benefits.
    The result is a large proportion of uninsured Americans are 
self-employed or work for small businesses. Without a health 
care program, it is difficult to attain and retain top workers, 
so it is difficult if small businesses have a health care 
program or they do not have it.
    Last month the full Committee heard testimony regarding a 
number of health care proposals. One plan, H.R. 765, Fair Care 
For The Uninsured, is one that I introduced with Representative 
Mark Kennedy in order to provide a refundable tax credit for 
the purpose of health insurance by those who are not offered 
coverage by their employer.
    Another we heard about was H.R. 525 by Representative 
Johnson and Ranking Member of the full Committee Velazquez 
which would create association health plans. I look forward to 
hearing more about your ideas about health care and what can be 
done, what we can do to help small businesses in this area.
    Another expensive task for small businesses is finding 
skilled labor or, better still, retraining skilled workers to 
move from old economy jobs to the new economy job market. With 
a shortage of skilled workers especially in trade industries, 
we need to work to find solutions to this problem.
    These issues and others that will be raised today are very 
important to the success of our small businesses. They are not 
unsolvable problems, but we need to work on finding innovative 
solutions. Innovative thinking is something small businesses 
are especially good at and so I look forward to the testimony 
we will hear today.
    I would like to thank Chairman Musgrave for holding this 
hearing. Clearly the issues our witnesses will share with us 
are significant concerns for so many of our nation's small 
businesses today. It is important that we carefully examine all 
options and identify and work on these problems to truly 
relieve entrepreneurs so that they can do what they do best--
put Americans to work.
    Thank you.

    Ms. Musgrave. Thank you, Mr. Lipinski.
    I would also like to recognize Mr. Westmoreland, the Member 
from Georgia, at this time.

    Mr. Westmoreland. Thank you, Madam Chairman. I appreciate 
your willingness to hold this hearing, and I also want to thank 
the witnesses for coming to testify.
    We are from the federal government, and we are here to help 
you. Those are things that we hate to hear as small business 
people, but I think with this Subcommittee what we are here 
today to do is to try to figure out how we can help you, if it 
is possible that we can help you.
    I am a small businessman, and I know that the most help the 
government can do for me is to get out of my business, but we 
want to see if we can help remove some of those obstacles that 
we have created in our regulations and also offer a chance for 
job creation because we are aware that approximately 75 percent 
of the net new jobs come from small business and that 99 
percent of all employers are small business people and so we 
understand that, and we want to do what we can to help, as 
funny as that may sound.
    I know that there are some small businesses out there that 
are doing great. They are obviously doing something right. 
There are also some that are not, and what we need to figure 
out is why they are not doing good. Is it their fault? Are they 
bad business people? Are we doing enough to offer entrepreneurs 
the ability to go into small business?
    There is nothing greater to me in this country than being 
an entrepreneur and owning a small business. Are they taking 
advantage of all the resources that we do offer for small 
businesses that were designed to help them specifically? Is 
there a problem with those resources and programs that we do 
offer? Are they operating properly, or is it too much hindrance 
from us?
    I look forward to hearing what the witnesses have to say 
today.
    Mr. Wilson, it is good to see you back before this 
Subcommittee again. I know that the Small Business Development 
Centers in Georgia are a big help to us, and they are spoken 
very highly of.
    Mr. Pressly, I think you and I have something in common. I 
have read your testimony, and there is so much truth in there. 
I am glad you are here to testify to those things that we face 
every day in our business.
    Also, Mr. Dean, a heating and air conditioning business. I 
have worked with that for years and all the environmental 
problems that are caused today or people think are caused by 
the home building industry.
    I look forward to all of your testimony, and we will see if 
we cannot come up with something to try to help you.
    Thank you, Ms. Chairman.

    Ms. Musgrave. Thank you, Mr Westmoreland.
    I would like to welcome the panel again. You probably know 
the time constraints that we are under. We have a little bit of 
guidance for you in that area, so we will try to stay on time.
    The first person that we would like to hear from this 
morning is Dr. McClelland, John McClelland, Vice President of 
Government Affairs from the American Rental Association. 
Welcome, Mr. McClelland.

   STATEMENT OF JOHN MCCLELLAND, AMERICAN RENTAL ASSOCIATION


    Mr. McClelland. Thank you, Madam Chairman, Mr. Lipinski and 
other distinguished Members of the Subcommittee on Workforce, 
Empowerment and Government Programs. I am pleased to be here 
today to represent the American Rental Association. I am going 
to summarize my testimony, but I ask that the full extent of my 
comments be included in the record.
    Before I get into specific issues, let me just give you a 
little bit of background so there is no confusion. The American 
Rental Association, first of all, began in 1955. We are about 
to have our fiftieth anniversary next year. We began in Moline, 
Illinois, with 22 members mostly from the midwest.
    Now, even though our headquarters remains in Moline, we 
have more than 7,500 rental businesses and 1,100 manufacturers 
who supply product into the rental industry as members of ours. 
The rental industry generates about $24 billion in revenues 
annually.
    We represent large and small members. Just as an example, 
one of our largest members is United Rentals. They have a 
market capitalization of $1.4 billion, and they have in excess 
of $3 billion in annual revenues. Then we have the small, 
family-owned business.
    Frankly, the majority of our members are those small, 
family-owned businesses, but we do have both sides of this 
equation, and I think that that is an important point to make 
when we start discussing some of the things that we believe 
make it difficult for our small business members to compete.
    We think, by the way, that this competition is essential to 
the success of our industry and in making our industry better 
so we are not against the competition. We just like to see as 
level a playing field as we can get.
    A.R.A. members rent tools, equipment and party supplies. 
Party, by the way, is one of the big, growing areas of our 
business. We provide these goods and services through we call a 
rent-to-rent contract so it is not rent-to-own. It is not a 
lease.
    The rental business is also pretty capital intensive. In 
2004 we have estimated that the value of the rental inventory 
is about $34.1 billion and that annually rental businesses 
spend between $3.4 billion and $6 billion to replace used 
equipment.
    Recent changes in tax policy like the bonus depreciation 
that expired last year, but also the expansion of Section 179 
provisions, have really helped the rental industry and 
especially with 179 our small members of ARA to really increase 
their investment in their rental inventory.
    Now let me address three very specific issues in federal 
policy that affect the investments in jobs in the rental 
industry. The first one is health care. This has been mentioned 
by the Chairwoman and the Ranking Member.
    We belong to the Coalition for Access and Choice Through 
Association Health Plans. That is a group of about 150 
associations that want the opportunity to provide health care 
to our members and our members' employees through our 
association.
    By the way, just another piece of information. ARA actually 
owns an insurance entity that provides liability and other 
types of insurance to our members, but we are not, as you know, 
able to provide a nationwide ERISA exempt health care plan 
through our association insurance company.
    Let me illustrate exactly how this affects us. I mentioned 
United Rentals. United Rentals has over 700 locations 
nationwide, so we may be in Westminster, Colorado, and we may 
have a family-owned business on one corner, and down the street 
is United Rentals. Those two businesses basically operate in 
the same business environment and are competing for the same 
labor pool, mechanics, counter people, those kinds of 
employees.
    United Rentals has a company health care plan that is ERISA 
exempt. They offer that health care plan to all their employees 
nationwide, and I would say that it is a very generous and 
well-operated plan. We applaud our members for doing those 
kinds of things and offering those kinds of benefits to their 
employees.
    However, our small business members are basically held 
captive by the private insurance market. So who are you going 
to go to work for, the company that says here is a generous 
insurance plan and wages to go along with that or the company 
who is having a really difficult time finding an insurance 
program that offers any kind of benefits to keep up with the 
ERISA exempt plan?
    I think that the answer is pretty clear, and that is really 
the crux of the issue for us and for our members is that we 
have essentially an unfair playing field out there that is 
created by this federal policy that makes it very difficult for 
our small business members to compete.
    We have a lot of second and--excuse me?

    Ms. Musgrave. Quickly, what are your other two points, Dr. 
McClelland?

    Mr. McClelland. Yes, ma'am. We have a lot of second and 
third generation businesses in ARA. The estate tax is very 
egregious. When shareholders of big companies die, their 
estates are liable for the taxes. When small business owners 
pass away, we often have to sell assets of the business.
    Large companies, the capital stock of the business is not 
affected when a shareholder passes away. In small businesses, 
it is exactly the opposite, and often times even though we have 
insurance and estate planning we spend money on that, and that 
is money that is not being spent to hire employees or to 
reinvest in the business.
    Finally, just a few words about liability reform. We own 
all of our equipment. We accept the risks of ownership, but we 
do not always have custody of that equipment. We would like to 
let you know that we would support and have in the past 
supported caps for non-economic damages of $250,000 except in 
very limited circumstances, and we have also supported federal 
actions so that renters, sellers and leasers other than 
manufacturers may be held liable only if they are directly at 
fault for some hardship that is caused.
    That completes my comments, and I will take any questions 
that you might have.
    [Mr. McClelland's statement may be found in the appendix.]

    Ms. Musgrave. We will do questions a little later. Thank 
you, Mr. McClelland.
    The second witness is Mr. Richard Dean, Senior Vice 
Chairman, Environmental Systems Associates, from Columbia, 
Maryland, Air Conditioning Contractors of America.
    Mr. Dean?

  STATEMENT OF RICHARD DEAN, ENVIRONMENTAL SYSTEMS ASSOCIATES


    Mr. Dean. Thank you. Chairman Musgrave, Ranking Member 
Lipinski and Members of the Subcommittee on Workforce, 
Empowerment and Government Programs of the House Committee on 
Small Business, on behalf of ACCA thank you for providing me 
the opportunity to testify today on this very critical issue to 
small business.
    ACCA is the national non-profit trade association that 
represents the technical, educational and policy interests of 
the men and women who design, install and maintain indoor 
environmental systems. We have over 50 federated chapters with 
nearly 5,000 local, state and national members. Most of our 
contractor members are family-owned small businesses, and many 
of these small businesses are in their second and third 
generation of family ownership.
    As the Chairman said, in addition to being a member of 
ACCA, I am an owner of Environmental Systems Associates in 
Columbia, Maryland, and have 21 full-time employees. We have 
provided residential heating and air conditioning services to 
customers in the Baltimore/Washington, D.C. corridor since 
1972.
    Our industry faces many challenges, and one that is 
becoming a crisis is the lack of qualified air conditioning and 
heating technicians to service America's homes and businesses. 
Unlike a variety of industries across the country, the HVACR 
industry continues to struggle to attract young men and women 
into our industry.
    There are several reasons for this shortage. One reason is 
the tendency by some educators to steer high school students 
away from vocational education and only towards four year 
colleges. Our industry feels very strongly on the importance of 
education, but we remain concerned that vocational education, 
which would train men and women to begin as HVACR technicians, 
is perceived as a second class career choice compared with 
attending a four year college.
    This could not be farther from the truth. In order to 
become an air conditioning journeyman, which is the first step 
in becoming a qualified technician that can perform service 
calls for my company, an individual must complete 144 hours of 
classroom instruction per year and 2,000 hours of on-the-job 
training in the field every year for a minimum of three years.
    One example of this training is obtaining EPA Section 608 
refrigeration recovery training, which trains journeymen on the 
proper handling of ozone depleting refrigerants used in modern 
air conditioning units.
    In July 2004, ACCA, along with other organizations in the 
HVAC industry, wrote to President Bush asking him to form a new 
dialogue with our industry to address this situation. I will 
submit a copy of that letter with my written testimony.
    It is imperative that the federal government, through the 
Departments of Education and Labor, work with our industry to 
remove the negative stigma that training to be an HVACR 
technician is somehow not good enough. On the average, a well-
trained technician in my company can earn as much as $40,000 to 
$50,000 a year upon entering the industry.
    In addition, nearly 40 percent of the businesses in our 
industry are run by former technicians. With hard work and 
dedication, becoming an air conditioning technician in your 
early twenties can be an avenue to owning your own small 
business and help to grow the economy and create more jobs.
    We feel that the Departments of Education and Labor should 
work together to educate school guidance counselors on the 
benefits of joining our industry and making it a lifelong 
career.
    Another recommendation that our industry feels would 
address our labor shortage would be to develop a program to 
train displaced manufacturing workers to become air 
conditioning and heating technicians. In many cases, the recent 
closure of manufacturing facilities has resulted in tremendous 
job loss with repercussions being felt throughout a community. 
Also, in most cases these jobs are lost forever as the 
manufacturing facility is moved offshore.
    These skilled workers are just the type of workers our 
industry desperately needs, and our industry would be very 
attractive to displaced manufacturing workers because our jobs 
cannot be moved offshore.
    This is an opportunity for Congress and the Administration 
to work together to create programs to fund training for 
displaced manufacturing workers, essentially create a program 
similar to the Carl D. Perkins Vocational and Technical 
Education Program that funds vocational education for young 
students, yet apply to individuals forced into a career change 
through the closure of manufacturing facilities.
    Congress has looked at similar legislation to help small 
businesses cope with training costs with the Skilled Workforce 
Enhancement Act, which I will discuss in more detail in my 
submission for the record.
    As I stated at the start of my testimony, most ACCA member 
companies are family-owned businesses. Your support for these 
measures would demonstrate recognition of the unique challenges 
that our small business contractors face every day in running 
our businesses. By helping to address these issues, Congress 
can go a long way in assisting job growth while also providing 
a real benefit to American consumers.
    Thank you for your attention and the opportunity to present 
our views before your Subcommittee.
    [Mr. Dean's statement may be found in the appendix.]

    Ms. Musgrave. Thank you, Mr. Dean.
    At this time we will hear from Mr. David Pressly, president 
of Pressly Development Company, Statesville, North Carolina, 
National Association of Home Builders. Welcome.

    Mr. Pressly. Thank you, Madam Chair.

 STATEMENT OF DAVID PRESSLY, PRESSLY DEVELOPMENT COMPANY, INC.


    Mr. Pressly. Madam Chair, I am David Pressly. Thank you and 
Members of the Subcommittee.
    I am the president of my development company, Pressly 
Development Company, of Statesville, North Carolina, and I am 
the 2005 first vice president of the 220,000 member National 
Association of Home Builders.
    Intense competition within the home building industry is 
good for consumers, but it also means small profit margins. 
Forcing builders to absorb the cost of inefficient regulations 
drives potential buyers out of the market, meaning less work 
for our members and fewer jobs for the people we employ. To 
give you an idea of some of the magnitude of the problem, for 
every $1,000 increase in the price of a home, 240,000 
households are priced out of the market.
    My written testimony touches upon regulations at HUD, 
Agriculture, Interior and the Environmental Protection Agency. 
I would like to spend some of my time here today discussing a 
particularly costly and bureaucratic regulatory burden, and 
that is the stormwater permitting process.
    The EPA is responsible for establishing a stormwater 
permitting program to address water runoff from residential 
construction projects. These fundamentally flawed regulations 
have a significant economic impact, adding up to six percent to 
the cost of development land.
    A six percent increase in development costs translates into 
an extra $3,000 charge, which excludes about 725,000 households 
from purchasing a home. Because of the extra compliance costs, 
America has fewer homeowners, less economic development and 
fewer jobs.
    The National Pollutant Discharge Elimination System or 
NPDES program established by the EPA requires a permit for the 
discharge of pollutants into the waters of the United States. A 
permit is needed for all construction activity that disturbs 
one or more acres of land or less if it is part of a 
subdivision.
    To be covered by the permit, a construction site operator 
must prepare a stormwater pollution prevention plan and file a 
notice of intent. To give you some sense of the complexity of 
the plans, the EPA's guidance for writing just the prevention 
plan is over 40 pages long. It is much like this book I have in 
my hand.
    In many areas of the country construction site operators 
must obtain two or three permits because most states and 
municipalities have their own stormwater regulations.
    In 2003, EPA issued an information request regarding the 
cost of filling out the notice of intent and developing the 
prevention plan. They estimated it would cost approximately 
$1,300. The information NAHB gathered from our membership 
showed the cost estimates were radically off base. Our members' 
estimates ran from $2,300 up to $7,000.
    This is just the cost for EPA's paperwork and does not 
include other costs such as obtaining the required state and 
local permits or for the actual on-site devices to control this 
water runoff.
    The NPDES permit requirements were originally designed to 
limit the effluent from industrial processes and municipal 
sewage treatment, but now the EPA has pigeonholed residential 
construction stormwater into the industrial discharge program, 
adding financial and bureaucratic burdens resulting solely from 
the Agency's wrongful application.
    Enforcement plays an important role in ensuring the success 
of the NPDES program and improving the health of the nation's 
waters. To be effective, it must include education and 
compliance efforts and be timely, predictable and tied to on-
the-ground environmental impacts.
    To date, however, this has not been the case. Internal 
wrangling within the Agency makes it impossible to follow the 
traditional compliance first/enforcement second approach. 
Further, EPA regularly seeks out actionable violations and 
levies significant fines for paperwork violations that have 
little bearing on environmental protection.
    For example, a builder in El Paso, Texas, received a $5,500 
fine for not filling the proper paperwork, even though he had 
all the necessary controls on his site and there was no 
environmental impact. A $5,500 fine can quickly put a small 
home builder out of business.
    In conclusion, EPA's implementation and enforcement of 
stormwater programs places an unnecessary burden on the 
building industry while arguably failing to result in 
demonstrable improvements to the quality of the nation's 
waters.
    Madam Chair, I thank you again for the opportunity, and I 
look forward to entertaining your questions.
    [Mr. Pressly's statement may be found in the appendix.]

    Ms. Musgrave. Thank you for your testimony.
    Our last witness will be Mr. Donald Wilson, president of 
Association of Small Business Development Centers, from Burke, 
Virginia. Welcome.

   STATEMENT OF DONALD WILSON, ASSOCIATION OF SMALL BUSINESS 
                  DEVELOPMENT CENTERS (ASBDC)


    Mr. Wilson. Thank you, Chairwoman Musgrave and Mr. Lipinski 
and Congressman Westmoreland. We are delighted to be here. We 
appreciate the invitation, and I am here representing the 
Association and the roughly 5,000 men and women who work every 
day trying to help small business survive and grow and create 
jobs in this country.
    You have all attested to the fact that the people who 
create jobs in this country are small business, roughly 75 
percent of net new jobs. Conditions out there, and these 
gentlemen have said it very well, are not good for small 
business in this country right now, despite I think heroic 
efforts on the Congress in a number of areas. The fact of the 
matter is job creation in this country is in trouble, and it is 
because small businesses are in trouble.
    On a historic basis, four years after a recession started 
the number of jobs in the country would normally be roughly 
four percent above the job level when the recession started. We 
are at about .3 percent above where we were in March of 2001. 
That is a staggering number.
    We have about seven million people unemployed, and the most 
staggering number is we have almost 400,000 fewer private 
sector jobs today than we did when the recession started, 
despite the fact that the unemployment level is not so bad, and 
much of that is due to people who have given up and quit 
looking for work.
    Now, the issues that have been discussed, everything from 
federal regulations to state regulations, health care costs, 
lack of skilled workers, these are issues that have been around 
for decades. They worsen from time to time, but they are always 
there.
    Perhaps the most classic, the cost of empowering a new 
worker. Payroll taxes in this country are astoundingly high, 
and they keep getting higher. As we look at the social security 
situation, we see that many of the folks who are proposing 
solutions are proposing higher payroll taxes.
    Our clients at the SBDCs over the last 25 years, and I am 
delighted to say this is our twenty-fifth anniversary year. We 
have served over 11 million small business owners and aspiring 
entrepreneurs, and the cost of hiring is a serious issue.
    There cannot be any higher issue than regulatory burdens. 
All of these men have testified to that. You know, we talk 
about what we are doing about regulation. You take Dr. Graham 
over at the White House, you take Tom Sullivan and all the 
people, the Paperwork Reduction Act, all of the things we are 
trying to do, but if you pick up the Federal Register at the 
end of the year it is about 70,000 pages year in and year out.
    Despite the efforts to make regulations more small business 
friendly, the number of regulations that these industries and 
all small business owners have to deal with continue to grow.
    For about six years now we have come forth with an idea of 
H.R. 230 to help small businesses comply effectively on a cost 
effective basis with the regulations that continue to grow. To 
the great credit of this Committee and to the House, that bill 
has been passed three times. It dies in the Senate. Much of 
that is due to the opposition of OMB because they maintain that 
$5 million just simply cannot be afforded out of a $2.5 
trillion budget. I think that is preposterous.
    Now, we say that job creation is job number one, and we say 
that small business does it and yet we look at what the federal 
government is investing. Investing. I am not talking about tax 
relief. I am talking about investing out of the $2.5 trillion.
    When I was on the Hill 30 years ago, about six-tenths of 
one percent of the budget went to assist small business. That 
number is now down to less than four one-hundredths. The Small 
Business Administration resources have declined by 40 percent 
in the last four years.
    The most staggering figure about the ASBDC program is the 
fact that despite the continuing increase of people who come to 
us for assistance, we are now not able to provide it to them. 
The hours for counseling last year went down nearly 100,000 
hours despite the growth in clients.
    These people are coming. They are looking for management 
assistance, and why would they not be? A person who starts a 
bakery often is a great cook, but does not know how to handle 
the books, does not know how to manage the business. It is not 
because they are ignorant. We have very little management 
training in this country.
    In your district alone, let me give you two classic 
examples, Chairman Musgrave. An assisted living facility. ASBDC 
counselors helped a young woman there to start her assisted 
living facility, helped them get a $450,000 SBA 504 loan, 
helped them get a $750,000 commercial loan from the Bank of 
Hugo-Limon, and as a result seven jobs created.
    In Julesburg, Colorado, these folks we are talking about 
are steelworkers, not college folks. The SBDC there, the 
counselor there helped a young gentleman by the name of Jim 
Rouse start a heavy equipment training school, helped him with 
his business plan, helped him work with the Community First 
National Bank of Sterling, 11 jobs created and a skilled 
workforce to run heavy equipment.
    This type of thing is going on every day in SBDCs and yet 
the dollar resources, the real dollar value, continues to 
decline as that program has been flatlined for the last five 
years in the budget.
    Small business has got to have regulatory compliance 
assistance. It cannot wait any longer. E-government is 
fabulous. You can put all the regulations you want up on the 
web, but it will take five Philadelphia lawyers to read them. 
The average small business person, just having the reg on the 
web is not going to help them figure out the cost effective way 
to do it.
    When I was with the National Tire Dealers and Retreaders 
Association, the stormwater runoff rule. We understood that 
rule and the threat to the retreading industry very well. I 
spent a year working with EPA because they were applying some 
of the rules to the retread industry, and when I was on the 
Hill with Congressman Broyhill and he was involved in writing 
that regulation we understood that it did not apply to the 
retread industry. After a year EPA finally said you are right. 
It does not.
    The average retreader would have never known that. They 
would have spent endless millions throughout the retread 
industry complying with that rule when it did not even apply to 
them. Only because they have an association and the association 
ran a regulatory compliance assistance program that I 
initiated, and that is what is needed nationwide.
    Congressman Sweeney working with the New York Department of 
Labor understands that. You folks have voted on it repeatedly. 
We need this Administration to back H.R. 230 and the House to 
pass it again and get it passed in the Senate, and we need 
additional resources to provide management training assistance 
to the small business people in this country who cannot 
flourish and create jobs without it.
    Thank you very much.
    [Mr. Wilson's statement may be found in the appendix.]

    Ms. Musgrave. Thank you for your testimony today.
    The testimony was excellent. Your written statements will 
be entered into the record without objection.
    When we talk about these regulations--this is for anyone on 
the panel--is there one agency that is more difficult to deal 
with than the others? Is there one that rapidly comes to mind, 
and is there one particular agency that is unresponsive when 
approached? Any one of you could answer that question.

    Mr. Pressly. Madam Chair, I have told you of our experience 
with the Environmental Protection Agency, and I have given you 
examples of how, first of all, we think we have been 
aggregated. We know we have been aggregated with large 
industries that generate quantifiable pollutants and municipal 
wastewater treatment plants, and here we are small home 
builders across the country dealing with just raw land.
    We do everything we can to keep that silt from washing off 
our site. We think that we are the first to say that we want to 
contain that silt on our site. We do not want any of that silt 
to go into streams. We want to do it in an engineering sense, 
in a scientific way to make sure that did not go off the site.
    We think it is completely unreasonable to link our industry 
with a heavy industrial polluter. I come from the deep south 
where they have dying mills. Those mills put predictable waste 
into our wastewater treatment system. We know how to deal with 
that.
    We are dealing with just dirt that runs off a site, and we 
want to stop that. We want to make sure it does not, but we 
want our regulations to reflect who we are and what our purpose 
is.
    Thank you, Madam Chair.

    Ms. Musgrave. Thank you.
    Mr. Dean, you talked about the need for vocational 
education. I started out as a school board member because I was 
very interested in education, and I have a great deal of 
respect for any line of work. You know, I was dismayed that 
very often there is the stigma attached to vocational education 
that you alluded to.
    Could you tell me how you are trying to work with 
educational folks to get these counselors talking to students? 
I mean, I believe in academic rigor, as I am sure you do too, a 
great deal of academic rigor, but there are some students that 
would be very well-suited to pick a career in vocational 
education.
    Could you elaborate on your efforts in that area, please?

    Mr. Dean. Our trade association has an outreach to go out 
to high schools and talk to classes and to guidance counselors 
about what young men and women can make in dollars and cents--
that seems to be very important to them at that age--and the 
careers that are available.
    I currently have three students who are involved and I have 
enrolled in a local training program that is actually run by 
our trade association at a local community college to get them 
through the 144 hours of classroom. I am paying them for the 
2,000 hours of work.
    We have an apprenticeship program in many of our 
jurisdictions. Our problem is that it is a very expensive 
process when most of these young men and women from a business 
standpoint cannot write a bill for four years. You know, they 
cannot generate a service ticket and so they are helpers and 
kind of locked into that.
    Some relief as this Skilled Workforce Enhancement Act 
provided for would be very helpful to us, but it is through the 
education department. You point out I think one of the most 
powerful things that we do and can continue to do is to go into 
high schools and talk to the guidance counselors and show them 
the opportunities that we have.

    Ms. Musgrave. Thank you very much.
    Mr. Pressly, recently I held a forum on affordable housing 
in Fort Collins, Colorado. That is a front range community in 
Colorado. As you might be aware of the fact, there is a lot of 
growth there. Homes are very expensive. People like teachers or 
firemen or policemen have a very difficult time getting into a 
home because their salary just is not enough for them to have 
their beginner home, if you will.
    I think many people are unaware of why homes cost so much. 
You know, they want government assistance, i.e., the taxpayers, 
to help out for affordable housing. Could you address some of 
the issues that make homes so expensive?

    Mr. Pressly. They are a series, and I have touched on 
several of those aspects in my testimony, Madam Chair. We 
recognize that for most American families the pathway to middle 
class is through home ownership.
    That is why the members of our association struggle day in 
and day out to help that first family, whether it is a 
traditional husband and wife or whether it is a single mother, 
get into that first home because if that initial barrier is set 
too high through costs, whatever those costs are, that family 
or that single mother will never see home ownership and be 
locked out of the middle class forever.
    I have given you several examples. There are many more in 
my written testimony about these regulations that impact the 
cost of a home. The home building industry is intensely 
competitive. Antagonists often say well gee whiz, that cost 
savings goes into that builder's pocket. Well, if there were a 
monopoly in home building across America that would be true, 
but there are so many of us who are very small business people, 
men and women in that building industry, and trying as hard as 
we can to ensure that we get those initial families.
    That is my primary purpose in being with you this morning 
is to say that there are these overwhelming regulatory barriers 
and many of which cost a lot of money which are ultimately 
added to the cost of that home which will preclude families 
across America from homeownership.
    I thank you for your part in that workforce housing 
initiative, and that has certainly been our focal point for 
several years to recognize that our local heroes in each of our 
communities across America for a number of reasons are locked 
out of ownership of that first home.
    I thank you for bringing that question up.

    Ms. Musgrave. Well, it is interesting. When we talk about 
affordable housing, very often we do not hear why cement is so 
expensive or wood is so expensive or what kind of applications 
are wrongly applied.
    If we could start sorting out those things I think we could 
have some market solutions that would really help those young 
couples or those single moms get into their homes and realize 
the American dream.
    Thank you.

    Mr. Pressly. So many regulatory barriers. You are 
exceptionally attentive at that forum because there is the 
Canadian lumber issue, the tariff on that Canadian lumber 
issue. There is the importing of cement from Mexico, those 
exceptional duties there.
    Our young people and folks who are not particularly 
affluent across America are paying that price, literally paying 
an extra tax on that home because of some of those trade 
issues.
    I thank you for your sensitivity to that.

    Ms. Musgrave. You are welcome.
    Mr. Lipinski, do you have questions?

    Mr. Lipinski. Yes. Thank you, Madam Chairman.
    I very much appreciated the testimony of all four of you 
today. I had a couple questions. I will start with Dr. 
McClelland. You had mentioned your support of eliminating the 
estate tax. Last week we voted in the House to completely 
eliminate it.
    I am not certain what is going to happen in the Senate, but 
if we did change the estate tax to have an exemption for $3.5 
million per individual, $7 million per couple, would that be 
enough to help your members, small business owners in your 
association?

    Mr. McClelland. Thank you for the question. I think that 
you are referring to the Pomeroy substitute--

    Mr. Lipinski. Yes.

    Mr. McClelland. --in a sense there. We did not support the 
Pomeroy substitute. We have been supportive of H.R. 8.
    Frankly, I will tell you that this issue has been one that 
until the Pomeroy substitute there really has not been very 
much room in the middle on. I mean, it has either been one side 
or the other on this, and we decided that a complete and full 
elimination of the estate tax was the side that we would take 
at that time.
    I agree there is going to be some interesting debate in the 
Senate. We have no idea what is going to happen, so I cannot 
tell you where this is going to end up, but right now our 
position is to continue to support full elimination. We really 
have not come up with a number.

    Mr. Lipinski. Do you have any idea how much? I am just 
trying to get a sense of is that enough of an exemption to take 
out from most of your small business owners the burden of the 
estate tax?

    Mr. McClelland. Because of the heavy capital that is 
involved in especially the construction end of the business --
you know, some of these machines cost $100,000 right off the 
top, and when you have several hundred of those in your fleet 
or 1,000 in your fleet, and that is not untypical.
    I believe that the amount of money that was in the Pomeroy 
substitute would probably not cover as many of our members as 
we would like to cover.

    Mr. Lipinski. Mr. Dean, I am really interested with your 
recommendations and was interested in your answers to the 
questions by Chairman Musgrave.
    I just want to say I am a former college professor, but I 
do think that this is something, you know, even though on the 
one hand I was always getting more and more kids to college, I 
think that it is important that we do provide what we can and 
help people and help kids to understand that there are these 
types of other jobs which are very important and can be good 
careers for them.
    What do you think it has been about the SWEA that has 
prevented it from being passed and becoming law, and is there 
something that we could do differently that you think would 
help?

    Mr. Dean. Well, first let me point out that I worked my way 
through college doing heating and air conditioning. I 
personally worked my way through college doing heating and air 
conditioning so I have seen both sides of the fence, and I 
would not give up either one.
    That said, the SWEA, I think the biggest objections that I 
had a sense of when it was processing through the effort was 
that they felt the cost of it, that the return would not be 
adequate for the amount that it was going to cost the 
government. I felt that maybe I do not understand that.
    I think that the Act would greatly help us because we have 
so many of our technicians that are in a stage that need 
extensive training particularly in our field. The air 
conditioning and heating is one of the most sophisticated 
trades when it comes to--nothing against plumbers or 
electricians, but you have to know all of those things to be 
able to work on today's modern technological advances in gas 
heating equipment and air conditioning equipment, printed 
circuit boards, the physics of refrigeration.
    It is very complicated and so there is a tremendous 
investment that small business owners have in getting 
technicians and retaining them through that training process. 
That is our challenge.

    Mr. Lipinski. Okay. Very quickly, Mr. Wilson, how would 
H.R. 230 add to what SBDCs do right now?

    Mr. Wilson. Well, our original job was simply to provide 
overall management and technical assistance in terms of 
financial management, human resources, et cetera, et cetera. It 
was in 1977 that Congress added the responsibility of providing 
small businesses with regulatory compliance assistance.
    We hear a lot about unfunded mandates. Our network 
basically feels that was an unfunded mandate. It was a new 
responsibility for us, one we were perfectly willing to assume, 
but we got no more resources to do it.
    To provide that type of expertise in the network takes some 
fairly sophisticated people. We can do it well. Pennsylvania 
has done it on a modest scale, Idaho, some others. Most of our 
people will try to work with some of the other regulatory 
compliance assistance, the 504 program, EPA folks.
    It is an interesting situation. The State of Pennsylvania 
and the State of Idaho have decided that the SBDCs can actually 
run the EPA 504 program better than the state governments and 
have subcontracted the program out to us.
    We can do the job, but we cannot do it if we are laying off 
counselors right and left. How can we hire new regulatory 
compliance counselors if we are laying off our regular 
management and finance counselors? That is what is going on.
    You know, we are seeing centers closed all over the 
country. Mississippi has closed probably five centers in the 
last two years. New Hampshire has closed two centers in the 
last year. That is simply because with no more funding with the 
difficult situations that state budgets and federal budgets, 
but OMB by its own submission to the Congress last year 
acknowledged that the program returns $2 to the Treasury for 
every $1 spent.
    If a small businessman or you or I could find an investment 
like that, we would be putting a lot of money in it, and yet we 
keep reducing the money or level funding. We can find the 
people who can do regulatory compliance assistance and do it 
very well as the folks in the state government in Pennsylvania 
and Idaho and others have acknowledged. We do it very, very 
well.
    Let me give you a classic example. I find that most small 
business people want to comply with regulations. Most small 
business people, they have family working in the business. They 
do not want it to be unsafe. I mean, you would not want your 
child or your cousin or your nephew or brother or sister 
working in a business that was unsafe.
    They want to comply with EPA and OSHA regulations. They 
simply do not know how. There are all kinds of people who will 
come along and tell them how from for-profit organizations, but 
that is not the most cost effective way to the business.
    Classic example. When I was with the National Tire Dealers 
and Retreaders, one of the issues is what do you do with waste 
oil? Everybody came around and told them you have to buy all 
this very expensive equipment, oil filter crushers, et cetera, 
et cetera, et cetera.
    However, the regs allow you to use gravity drains and 
simply drain the oil filter. Okay. If a small business person 
does not understand that that is an option, especially a 
smaller business, he will spend money that he does not need to 
spend because he is not an expert, okay? He is just trying to 
run his business and run it right.
    He is willing to comply, but he wants to keep the 
compliance cost as reasonable as possible. SBDC counselors can 
help advise him how to do that and incorporate it in their 
overall business plan.
    You start a restaurant. You have people who want to go out 
and start a restaurant who are not even aware of the ADA 
regulations. If they read them on the web for the next two 
months they still would not understand them. If they are going 
to start that business and run it properly without getting 
fined, they have to know what to do, how to do it in the most 
cost effective way.
    We can provide that training and that knowledge. They come 
to us all the time, but we simply lack the capacity to do it 
properly.

    Mr. Lipinski. Thank you, Mr. Wilson. You have certainly 
sold me on SBDCs, so we will have to see what we can do about 
helping them so they can keep helping small business.

    Mr. Wilson. Thank you, sir.

    Ms. Musgrave. Mr. Westmoreland, do you have questions?

    Mr. Westmoreland. Oh, you bet. Mr. Pressly, you talked 
about the notice of intent. We have to file them in our 
business. I am in the same business you are. They go to 
somewhere. We do not know where they go because I do not think 
anybody ever looks at them, to be honest with you, until there 
comes a time where there is a problem.
    The same thing with the reports, the NPDES reports that you 
send in. There are stacks somewhere, and they are really held 
there for litigation purposes I truly believe. I do not think 
anybody ever even looks at them.
    When we are putting up these environmental protection laws 
and yet the cities and counties make us pave our streets wider, 
they put in more impervious surface down, they require curb and 
gutters so you run all the water to one area, and I do a lot of 
developing in rural Georgia. Even on a three acre tract they 
want you to have curb and gutter rather than an open ditch 
where the water would get back into the ground.
    Until I think that they make cities and counties start 
looking at some of their regulations that really calls more of 
an impact on this stormwater runoff and other things, and they 
need to leave us alone because I think we would more than 
gladly help them in that problem. I think we could address that 
in the development industry itself.
    Do you know how the EPA has determined the effect of what 
stormwater really has on our water quality?

    Mr. Pressly. I agree with you, Mr. Westmoreland. It would 
seem in the eminent brilliance of our local administrators, of 
our state administrators and certainly our federal government, 
you would think there would be some congruence in all that 
brilliance to tell us where we need to be, what we need to do 
to solve the problems.
    We have the same problem with EPA. Anecdotally, I present 
to you some of the costs that our members have borne in terms 
of this permitting process and in terms of our fines as well. 
We have gone to EPA under the Freedom of Information Act to ask 
for their information because we want to be at the same table. 
We want to solve those problems, but we want to have the best 
information we can.
    We have been denied that information from the EPA. We have 
appealed that decision. We are waiting on that appeal, but we 
are here to say we want to do the right thing, and we want to 
be effective. As these gentlemen said, we want to be custodians 
of our water. We want to be great custodians of our air for our 
customers and our children and those who work with us, but we 
feel like so many times we are frustrated every step of the 
way.
    We are the first to say we want to do our part to eliminate 
those barriers and eliminate those impediments and achieve this 
common goal, which I think we all have.

    Mr. Westmoreland. Absolutely. Mr. Dean, you talked about 
the education part of it. You know, they are trying to cut the 
Perkins funding. The President would like to put that money 
into I think the High School No Child Left Behind.
    I was at a high school in Upson County, and I was in a 
class, a geometry class. They were trying to tell or explain to 
the students how to get the hypotenuse of a right triangle. I 
said well, do you know what you are doing is you are squaring 
up a house? I mean, that is exactly what you are doing.
    If you take somebody out in the field that may not 
comprehend what you are trying to teach them in a geometry 
class and you take them out there with a tape measure and you 
show them how to square something up, it becomes practical to 
them and they understand it.
    I think that that is what a lot of people do not 
understand. I know in the heating and air conditioning business 
you take somebody in a classroom and try to get them to figure 
up how many cubic feet per minute air moves through a round 
pipe or can get through a square duct or whatever.
    They would think what in the world do I need to know this 
for, whereas if you take them and put them into that practical 
aspect they not only learn some geometry or trigonometry, but 
they learn chemistry. They understand that galvanized pipe and 
copper have a reaction to each other, so they not only learn 
geometry or trig or math, but they learn chemistry and other 
things.
    It is just as important that we get those people who are 
not going to go on to get a four year degree, and some of your 
technicians I am sure will have as much classroom education as 
some of those, but they get a lot of academics in those 
practical experiences that we offer in our industry in the 
training that we are trying to do for these young people. It is 
like you said. $50,000 is not a bad place to start when you get 
into the industry.
    What could we do to make people better understand the fact 
that everybody is not going to go to college and that what is 
happening is hurting us in our industry as far as having a work 
supply which kind of gets into the immigration situation that 
we hear so much about right now?

    Mr. Dean. Well, as I said earlier, our efforts, we are 
working with manufacturers also now because they have more 
money than we do to get out to the public in general about how 
critical our trade, our industry is.
    This House would not be in session if the air conditioning 
was not working. The hospitals in this area would close down. I 
mean, we are essential, yet people have a very hard time 
understanding that this can be a very great industry to work 
in, and they need to start learning it early, even in middle 
school, that this is an essential, vital industry.
    Two of my daughters are in college now, but they are very 
appreciative of the fact that their father works in the heating 
and air conditioning trade because they would not have been 
able to afford it without it.

    Mr. Westmoreland. Absolutely. Do I have time for one other 
question?

    Ms. Musgrave. Yes, Mr. Westmoreland.

    Mr. Westmoreland. Dr. McClelland, you mentioned, and I have 
not figured out yet why we want to continue to tax the 
businessman that has created jobs. He has provided for his 
family. He gets up early every morning. He works hard. As I sit 
on the Floor of the House, some people look at him as just a 
gift that keeps on giving. You know, even after he is dead they 
want to tax him.
    Other than the inheritance tax, have you had any complaints 
from your members about the alternative minimum tax and how 
that is affecting them?

    Mr. McClelland. Well, that is a great question because that 
is mainly an issue for individual income, as opposed to the 
business tax, but I can tell you that I hear and have heard 
more about that recently in terms of any other federal tax 
issue than anything else.
    I mean, we will talk about Section 179 or the estate tax as 
policies that the Association is supporting on behalf of our 
members, but I have a lot of members who come and tell me that 
they got it this year or it hit them last year and that it hit 
them again harder this year.
    I think that the fact is that that tax was not indexed for 
inflation and now what was considered wealthy a number of years 
ago is basically middle class now. We have an awful lot of 
people that are getting hit by that tax so I certainly do hear 
a lot about that from my business people.

    Ms. Musgrave. Thank you, Mr. Westmoreland.
    Mr. Lipinski, any more questions or comments?

    Mr. Lipinski. I just want to thank all the witnesses for 
their written and their testimony here today and the answers to 
the questions.
    I look forward to working also on this Subcommittee, on the 
Committee, to work on getting rid of some of these barriers. We 
all know how important small businesses are. We need to make 
everyone else in this country aware. I think it is not always 
the case that people are aware of how important small 
businesses are to our economy, in creating jobs and to our 
communities.
    I look forward to working here in Congress to do what we 
can to get rid of some of these burdens that are faced by small 
business owners. I thank everyone for your comments here today.

    Ms. Musgrave. Thank you.
    I would just like to say that in regard to Section 179 and 
the expensing limits I have just introduced a bill--you know 
they are set to expire in 2007--that would extend those limits 
to 2010, moving in the right direction. We will be working on 
that.
    I think that you have heard from Members on both sides of 
the aisle that we really want to be supportive of small 
business. My husband and I have had a small business for many 
years, and I know you work until the work gets done. You get up 
early. The buck always stops here.
    I think that has been an incredible experience for our four 
children to see, as Mr. Dean alluded to the fact that his 
college daughters are aware of where the tuition dollars come 
from.
    I just applaud the men and women around America that do 
what needs to be done, whether it is unclogging our pipes or 
fixing the tires on our car or working on the air conditioning 
and heating. We really must as Americans get over this stigma 
that if you are in the workforce without a lot of letters 
behind your name you are not doing something significant 
because this country could not go on without these individuals 
doing this work.
    We want to be very respectful of these occupations. We want 
to do things in this country that will give a better life to 
our children and our grandchildren and look at regulations that 
do not make sense, that are not applied properly.
    We have a great deal of concern for our environment and 
those things that really benefit all of us, but we need to stop 
doing things that do not make sense that cost people a lot of 
money.
    Mr. Westmoreland, Mr. Small Business Owner, do you have any 
other comments you would like to make?

    Mr. Westmoreland. Yes, ma'am. I would like to make just a 
couple more.
    I want to thank you all for coming. I know that some of you 
gave recommendations of what we could do to actually put 
something into law in the statute that would really help. You 
know, it is amazing to me that we have so many regulations.
    You mentioned the Federal Register, and how many pages that 
is. I wish most Americans would look at it. I think they would 
understand that we are doing a lot of things that we do not 
need to be doing.
    Mr. Pressly, you mentioned some of the endangered species. 
If you ever see one of these on your job, get rid of it. It is 
the shiny-rayed pocketbook mussel. In Georgia, in Fayette 
County, Georgia, we are trying to build a water reservoir that 
would furnish the people of that county their water deeds for 
the next 50 years with irrespect to growth.
    Four years ago, one of these was found four and a half 
miles below the dam site. One of them. The Fish and Wildlife 
asked if they would do another study. They did one two years 
ago. They found one mussel. This time it was six miles below 
the dam.
    They have purchased about $7 million of mitigation 
property, and they are fixing to have to close on the deal. 
They want them to do another study. These studies cost $250,000 
each.
    I mean, you know, we have to put some common sense into 
some of this stuff. I have noticed the statistics you had here 
about the number of acres that are set aside for some of these 
things. I am all for saving endangered species, but some of 
this has just gone entirely, entirely too far.
    I really want to know if you all have any ideas of what we 
can do to bring some common sense into some of these things and 
what we can also do to make the public realize exactly what is 
going on because everybody wants clean water. Everybody wants 
clean air, but how clean is clean? To what extent do you take 
it, and at what cost to our economy do you go with it?

    Mr. Pressly. We have a number of aspects, and I would like 
to put those in your hand if I may, a number of written aspects 
just to answer that very question so you can have those for the 
record.
    Many of us feel the same way. Just where is that balance? 
How have we lost ourselves? How have our goals become obscured 
by the nefarious species you have in your hand? At what cost?
    We think about stormwater. We as home builders certainly 
want to manage that, and we know that we contain every bit of 
it. We could have done the same thing to our Pentagon. We could 
have designed our World Trade towers so they would never come 
down, but at what cost? At what opportunity?
    In western North Carolina we never would have expected to 
have two hurricanes back to back last summer come through to 
cause stormwater runoff problems. We never would have done 
that. Each one of those construction sites could have been 
designed, but at what cost?
    What cost, Mr. Westmoreland, and what is our goal? What is 
our common goal we have? To answer you specifically I have a 
whole list of things, but rather than taking your time now I 
would like to put them in your hand.
    Thank you, sir.

    Mr. Wilson. Mr. Westmoreland, you asked what easy things 
can be done. We have an interesting situation with the SBA. SBA 
basically evaluates an SBDC in terms of its quality-based, as 
we laugh and say, body count.
    All they want, because their district directors get bonuses 
at the end of the year if they achieve goals. Well, for SBDCs 
and basically the management and technical assistance programs 
goals are just how many people did you run through the 
turnstile.
    That would be like saying well, we can tell whether or not 
a school is good by how many kids who are in it or how many 
kids are in the classroom. They would rather us see a hundred 
people for an hour than 20 small business owners for five 
hours, and yet all of our research for a quarter of a century, 
we understand we are not going to have significant economic 
impact and job creation with that business if we just see them 
an hour in a cloud of dust.
    We have appealed to them for six or seven years to come up 
with some other way, economic impact, because you see it is a 
match program. Your State of Georgia puts dollars into that 
program, okay? Mr. Lipinski, in fact it is run out of the 
state, Mark Petroli in Illinois. It is run out of the state 
government. They put state dollars into the program.
    What do those matching partners want? They want economic 
impact. If we are forced as we saw in this last year where the 
hours per client went down as we try to achieve that ever 
higher number, we are not doing the small business person any 
favor.
    We are reducing we believe job creation and economic 
impact, which will lead our partners to say we may not want to 
invest in this. If they do not invest, we cannot get the 
federal dollars because without the match we cannot get the 
federal dollars.
    The federal review recently talked about the SBA disaster 
loan program and how they evaluate their success by the number 
of people who come in and apply; not how many people get it or 
how many businesses are saved. This is the type of bean 
counting that occurs in most bureaucracies. We just happen to 
work with SBA.
    The fact is they refuse to say the measurement of a 
management and training assistance program, and you can talk to 
the women's business centers. You can talk to SCORE. We all 
feel the same way; that we should be measured not on body 
count, but on economic impact. The Agency and both 
Administrations, Republican and Democrat, continues right on. 
We want body count.
    Now, just a simple word or letter saying, you know, this 
program is designed to create jobs and create economic impact, 
we hope you will evaluate these programs based on that, would 
probably make all of these programs, the Women's Business 
Center, SCORE, et cetera, minority business agency policy much 
more effective and serve the client much better.

    Ms. Musgrave. Thank you, Mr. Westmoreland.
    Mr. Lipinski, did that elicit any more need for comment 
from you?

    Mr. Lipinski. No, Madam Chairman.

    Ms. Musgrave. Okay. Thank you very much, fellow Members, 
and thank you, gentlemen, for your excellent testimony today.
    This hearing is adjourned.
    [Whereupon, at 11:20 a.m. the Subcommittee was adjourned.]

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