[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
MARKUP OF THE SMALL BUSINESS
ADMINISTRATION FISCAL YEAR 2012 BUDGET
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HEARING
before the
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
MARKUP HELD
MARCH 15, 2011
__________
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Small Business Committee Document Number 112-005
Available via the GPO Website: http://www.fdsys.gov
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HOUSE COMMITTEE ON SMALL BUSINESS
SAM GRAVES, Missouri, Chairman
ROSCOE BARTLETT, Maryland
STEVE CHABOT, Ohio
STEVE KING, Iowa
MIKE COFFMAN, Colorado
MICK MULVANEY, South Carolina
SCOTT TIPTON, Colorado
CHUCK FLEISCHMANN, Tennessee
JEFF LANDRY, Louisiana
JAIME HERRERA BEUTLER, Washington
ALLEN WEST, Florida
RENEE ELLMERS, North Carolina
JOE WALSH, Illinois
LOU BARLETTA, Pennsylvania
RICHARD HANNA, New York
NYDIA VELAZQUEZ, New York, Ranking Member
KURT SCHRADER, Oregon
MARK CRITZ, Pennsylvania
JASON ALTMIRE, Pennsylvania
YVETTE CLARKE, New York
JUDY CHU, California
DAVID CICILLINE, Rhode Island
CEDRIC RICHMOND, Louisiana
GARY PETERS, Michigan
BILL OWENS, New York
BILL KEATING, Massachusetts
Lori Salley, Staff Director
Paul Sass, Deputy Staff Director
Barry Pineles, General Counsel
Michael Day, Minority Staff Director
C O N T E N T S
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Opening Statements:
Graves, Hon. Sam............................................. 1
Velazquez, Hon. Nydia M...................................... 2
APPENDIX
Views and Estimates of the Committee on Small Business on Matters
to be set forth in the Concurrent Resolution on the Budget for
Fiscal Year 2012............................................... 4
Statements for the Record:
Cicilline, Hon. David N...................................... 23
Clarke, Hon. Yvette D........................................ 26
Chu, Hon. Judy............................................... 28
MARKUP OF THE SMALL BUSINESS ADMINISTRATION FISCAL YEAR 2012 BUDGET
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TUESDAY, MARCH 15, 2011
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 1:34 p.m., in Room
2360, Rayburn House Office Building, Hon. Sam Graves [chairman
of the Committee] presiding.
Present: Representatives Graves, Coffman, Mulvaney, Tipton,
Fleischmann, West, Ellmers, Walsh, Barletta, Hanna, Velazquez,
Schrader, Altmire, Clarke, Cicilline, Owens, and Keating.
Chairman Graves. We will go ahead and call this markup to
order.
Two weeks ago, the Committee heard from Administrator Mills
about the Small Business Administration's budget for 2012. The
Committee now has the opportunity to provide its opinion on the
budget for the SBA. The Views and Estimates considered today
will be transmitted to Chairman Ryan for incorporation into the
Congressional budget resolution.
The past few years have been very difficult for small
businesses. They have had their credit lines cut, they have
lost customers, and they have laid off workers. And these
businesses have had to reduce their expenses, including
overhead.
The federal government faces very similar constraints, and
the chasm of the deficit requires tough choices to be made.
There appears to be no effort put forth by the Administration
to eliminate duplicative programs that are costing taxpayers
millions of dollars.
The Views and Estimates before us cut nearly $100 million
from the SBA budget. Fourteen programs are defunded because
they duplicate existing programs at the SBA or they are
duplicated at other agencies. Other programs receive no
recommendations of funds where there is an absence of any
evidence that they are actually helping small businesses create
new jobs.
Despite these cuts, the core functions of the SBA--to make
capital available, to provide advice, and to increase the
utilization of small businesses as federal government
contractors--is preserved. In fact, through some very judicious
reallocation of funds, the services available to entrepreneurs
will be improved over the SBA budget proposal that was given to
us.
The Committee recognizes the potential for fraud and abuse
in various SBA programs. And, as a result, the Views and
Estimates provide additional funds for modernizing the Loan
Management Accounting System and the Office of Inspector
General to address those very concerns.
And, finally, but for the need to fund SBA guaranteed
lending programs, without which small businesses cannot obtain
needed capital to create jobs, the Views and Estimates under
consideration today represents a $155 million cut in the SBA
budget request for fiscal year 2010.
I now recognize the ranking member for opening remarks.
Ms. Velazquez. Thank you, Mr. Chairman.
Today's consideration of the Committee's Views and
Estimates on the SBA budget proposal could not be happening at
a more critical time. In recent months, it has become clear
that the economy is showing progress on many fronts; however,
employment gains are lagging. And it is in this respect that
the SBA can play an important role.
Unfortunately, the SBA continues putting its own
unauthorized programs ahead of other proven initiatives. This
includes seven initiatives, at a cost of more than $50 million.
Yet, no performance metrics accompany these sizeable requests.
We all need to tighten our belt, and it begins with proposals
like this.
Just as the administration is creating its own programs
outside of the legislative process, it is defunding initiatives
that have been documented to have a pattern of success. The
SBDC programs, for instance, which saw its core budget cut by
$10 million, produces nearly $3 in Federal revenue for every $1
spent. It simply makes no sense to divert money from reputable
programs and give it to the agency's untested projects.
The SBA also continues picking which programs to administer
and which to overlook. It sees fit to implement the 504
refinancing and the intermediary pilot programs, even though
they risk taxpayers' dollars excessively and offer little in
the way of meaningful job creation. And over the past 5 years,
the SBA has dumped millions into an ineffective IT system, the
Loan Management Accounting System. But when it comes to other
initiatives, such as the Increased Veterans Participation
Program, which was passed into law 3 years ago, the agency
cannot find any money.
Little attention is also paid to solving SBA's most
pressing problems, such as the ongoing fraud in its contracting
and delegated authority in the lending programs. If we are
going to spend additional money, it should go toward cleaning
up waste and abuse so that the agency's existing programs
actually work and help small businesses.
With regard to the majority's Views and Estimates letter, I
support several provisions. The letter recommends the
elimination of several unauthorized pilot programs, as well as
the questionable initiatives created in the Small Business Jobs
Act of 2010. It is correct to terminate those programs if they
have not demonstrated any value to the taxpayer.
However, there are several areas of concern. By proposing
to eliminate funding for the Veterans Business Outreach Center,
it is limiting the ability of the 190,000 veterans from Iraq
and Afghanistan to launch their own businesses. Veterans who
have a high rate of entrepreneurship need more outreach, not
less, regardless of the cost. As we seek to tighten the SBA's
belt, we should not be doing so at the expense of those who
have already sacrificed so much for our Nation. On this basis
alone, Members should take pause in adopting these views.
With regard to ending frivolous programs, we missed an
opportunity to send a clear message on the administration's
proposed SBIC subprograms. The Views letter sent inconsistent
signals by first stating that funds should not be made
available for these initiatives; then, it seemingly contradicts
itself by stating that, if a new program is created, the SBA
should do so with a separate credit subsidy rate. This gives
the agency at least tacit approval to go forward with this
unauthorized project. As a result, the Views are permitting the
exact sort of wasteful spending that we are concerned with
stopping.
I am concerned regarding all other wasteful unauthorized
programs in any form, and we will make this clear in our Views.
As we all know, it is not uncommon to disagree on budget
priorities. While the chairman and I may not fully agree on our
Views, I think it is clear that we are both disappointed in the
agency's priorities. The inconsistency in its funding request
is indicative of an agency that needs to rethink its
priorities.
Just as the recent downturn required entrepreneurs to think
more strategically, the SBA should be doing the same. What this
Committee needs to see is a refocusing on initiatives that have
positively impacted business owners while giving taxpayers a
reasonable return on their investment.
With that, I yield back.
Chairman Graves. Thank you.
Are there any other Members who wish to be recognized for a
statement on the Views and Estimates?
Mr. Cicilline.
Mr. Cicilline. Thank you, Mr. Chairman. I do have some
remarks that I would like to, with unanimous consent, ask be
included in the record.
Chairman Graves. Thank you very much. No objection, we will
include them in the record.
Any other Members wish to be heard?
The Committee now moves to the consideration of the Views
and Estimates letter.
The clerk will read the title of the document.
The Clerk. Views and Estimates of the Committee on Small
Business on matters to be set forth in the Concurrent
Resolution on the Budget for Fiscal Year 2012.
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Chairman Graves. I would ask unanimous consent that the
Views and Estimates letter be considered as read and open for
amendment in its entirety.
Does any Member seek recognition for the purpose of
offering an amendment?
Seeing none, the question is on adopting the Views and
Estimates letter.
All those in favor, please say, ``Aye.''
All those opposed, say, ``No.''
The ayes appear to have it. It is the opinion of the chair
that the ayes do have it. The Views and Estimates letter is
agreed to.
And I now recognize the ranking member for a motion.
Ms. Velazquez. Yes, Mr. Chairman, I want to provide the
Committee notice that Democrats will be filing separate Views
with the Committee on the Budget.
Chairman Graves. Without objection, so ordered.
And I would ask unanimous consent that the Committee be
authorized to correct punctuation and make any other necessary
technical changes in the document considered today.
And, without objection, that is so ordered.
I do want to, real quick, before we finish, welcome Mr.
Hanna from New York and Mr. Barletta from Pennsylvania to the
Committee, our brand-new members. And I appreciate them being
here today.
And, with that, the hearing is adjourned. Thank you.
[Whereupon, at 1:44 p.m., the committee was adjourned.]
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