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21–287 PDF 2005

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 

COMMITTEE ON SMALL BUSINESS 

DONALD A. MANZULLO, Illinois, Chairman 

ROSCOE BARTLETT, Maryland, Vice 

Chairman 

SUE KELLY, New York 

STEVE CHABOT, Ohio 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

JEB BRADLEY, New Hampshire 

STEVE KING, Iowa 

THADDEUS MCCOTTER, Michigan 

RIC KELLER, Florida 

TED POE, Texas 

MICHAEL SODREL, Indiana 

JEFF FORTENBERRY, Nebraska 

MICHAEL FITZPATRICK, Pennsylvania 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

NYDIA VELA ́ ZQUEZ, New York 

JUANITA MILLENDER-MCDONALD, 

California 

TOM UDALL, New Mexico 

DANIEL LIPINSKI, Illinois 

ENI FALEOMAVAEGA, American Samoa 

DONNA CHRISTENSEN, Virgin Islands 

DANNY DAVIS, Illinois 

ED CASE, Hawaii 

MADELEINE BORDALLO, Guam 

RAU ́ L GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

LINDA SA ́ NCHEZ, California 

JOHN BARROW, Georgia 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin

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 

ROSCOE BARTLETT, Maryland 

BILL SHUSTER, Pennsylvania 

MICHAEL FITZPATRICK, Pennsylvania 

LYNN WESTMORELAND, Georgia 

THADDEUS MCCOTTER, Michigan 

JEB BRADLEY, New Hampshire 

DANIEL LIPINSKI, Illinois 

TOM UDALL, New Mexico 

DANNY DAVIS, Illinois 

RAU ́ L GRIJALVA, Arizona 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin

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) 

(1)

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. 

2

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—creVerDate 0ct 09 2002 17:08 Aug 29, 2005 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 G:\HEARINGS\21287.TXT MIKE
3

ate 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 employ- ees, 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 selfemployed 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 

4

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 

5

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, familyowned 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. 

6

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 familyowned 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 

7

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 

8

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 EnVerDate 0ct 09 2002 17:08 Aug 29, 2005 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 G:\HEARINGS\21287.TXT MIKE
9

hancement 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 

10

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. 

11

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 oppoVerDate 0ct 09 2002 17:08 Aug 29, 2005 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 G:\HEARINGS\21287.TXT MIKE
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sition 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. 

13

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 

14

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. AnVerDate 0ct 09 2002 17:08 Aug 29, 2005 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 G:\HEARINGS\21287.TXT MIKE
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tagonists 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.

16

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 

17

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 

18

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 

19

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 

20

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 

21

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 

22

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 shinyrayed 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.

23

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.

24

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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