San Diego Business Journal Small Business Bears the Brunt of
Federal Regulations

Small businesses got a boost from the governor on one piece of legislation, but not on another.

The California Chamber of Commerce applauded Gov. Gray Davis for the veto of SB 71, a bill that would have increased workers' compensation costs to businesses by more than $3.6 billion.

"We are pleased that the governor has vetoed SB 71," said Allan Zaremberg, president of the California chamber. "The business community cannot continue to be burdened with the kinds of excessive costs called for under SB 71, especially when the money is applied to a failing system."

In his veto message, Davis said significant improvements need to be made to workers' compensation to better serve both the injured workers and businesses.

Zaremberg said it's also the chamber's goal, adding the chamber would support increased benefits to injured workers if the system were reformed so more of the money businesses pay into the system gets to the people who need and deserve it.

"Currently, California employers' cost of premiums are among the highest in the nation, but we rank next to last on benefits for severely injured workers," he said. "We agree that California's severely injured workers need higher benefits, but the governor's veto for the third year in a row, has reiterated our position that reforms must be made before that action can take place."

However, Davis also signed a bill opposed by the chamber. SB 40 increases unemployment insurance benefits for workers, which Zaremberg called an "unreasonably large" increase.

"The California Chamber of Commerce is disappointed that Davis signed SB 40," he said. "SB 40 does not provide enough offsetting reforms to mitigate the incredible cost impact on employers. It also puts the Unemployment Insurance Fund at risk of insolvency."

Zaremberg added that the business community does favor increased benefits within the existing unemployment insurance tax rate schedule. The chamber had previously offered an alternate proposal to provide a benefits increase to unemployed workers, while keeping the insurance fund intact and avoiding an increase in unemployment taxes.

"The chamber objects to this legislation as the correct method to accomplish the task of increasing benefits," he said. "We hope that the governor will take into account the impact on business and the economy when making the decision to sign or veto additional legislation that increases costs to business."

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Small Biz Shoulders Burden:

If you're a small business, you're paying a disproportionately large share of the cost of complying with federal regulations.

That's according to the Office of Advocacy, a subsidiary of the Small Business Administration. The office released a study Oct. 23 which estimates the costs of federal regulations on small, medium-sized and large businesses.

The study by W. Mark Crain and Thomas D. Hopkins said the per-employee cost of federal regulations for firms with fewer than 20 employees was $6,975 in 2000. That's 61 percent higher than the roughly $4,320 per employee cost for firms with 20-499 employees, and 56 percent higher than the $4,471 cost for large firms with 500 or more employees.

Small firms suffer particular hardships when it comes to environmental and tax compliance regulations, according to the report. Per employee costs of environmental regulations for firms with fewer than 20 employees exceeded the costs for firms with 20 to 499 employees by 184 percent and for firms with 500 or more employees by 364 percent, the report said.

As for tax compliance, the per employee costs for businesses with fewer than 20 employees topped the costs for firms with 20 to 499 employees by 92 percent and for firms with 500 or more employees by 114 percent.

"What concerns the Office of Advocacy is that the cost of regulations will discourage individuals from starting small businesses and that compliance costs will reduce their ability to compete," the authors of the study stated. "Moreover, the burden will cripple small business innovation and ultimately damage the economic engine of the country."

Truly Fast Food:

The Albertsons chain of supermarkets is offering a new service in San Diego , online grocery delivery.

The Boise, Idaho-based chain announced the launch of Albertsons.com Oct. 23. The service allows virtually all products available in an Albertson's store to be purchased online for delivery to the home or office.

The service, offered in Seattle since 1999, allows customers to order from Albertsons online. The store's 25 delivery vans will provide a guaranteed delivery within a 1 & #733;-hour window of the customer's choice, said Laura Jane Hernandez, spokeswoman for Albertson's.

Another option is store pickup from any of Albertsons' 38 locations in the county. Orders placed by 10 a.m. will be available for pickup after 5 p.m. the same day, Hernandez said.

Cost of the service is $9.95 for door-to-door delivery and $5.95 for pickup, she said.

Call Zion at (858) 277-6359, Ext. 112, or e-mail lzion@sdbj.com. The deadline for the Nov. 19 issue is Nov. 9.