Bill Would Require Impact Analysis

Lawmakers are considering a bill that would require Connecticut’s state agencies to conduct a small business financial impact analysis before adopting new regulations.

Supporters of the bill say such a requirement would give the state proper pause before enacting standards that could harm small business.

While a similar financial impact analysis is required on proposed bills that would affect municipalities, regulatory agencies are not required to do the same for small business.

Rep. Diana Urban, D-Stonington, sponsor of the bill, said that Connecticut lawmakers need to be aware of the financial impact of their proposed regulations affecting approximately 75,000 small employers in the state, especially during the current economic crisis.

“We all know that small business is the economic engine for this country,” Urban said. “Knowing the importance of small business to our economy, it only makes sense to do what we can to help them.”

As the law currently states, regulatory agencies are required to consider flexibility standards in which some allowances could be granted for small business compliance. This could be less stringent compliance or reporting requirements, simplifying compliance or reporting requirements for small business or exempting small business from any or all of the requirements in proposed regulations.

The proposed bill would strengthen that process in favor of small business by allowing an open hearing in the General Assembly and providing an actual fiscal analysis that could give decision makers a better idea of regulatory impact, said Eric Brown, associate counsel for the Connecticut Business & Industry Association.

While regulatory flexibility analysis is required for companies that employ fewer than 50 people full time or have less than $5 million gross annual sales, the bill looks to expand the definition of small business to companies with fewer than 75 employees.

State legislatures across the country are meanwhile considering implementing similar measures, though the definition of small business varies. John McDowell, spokesman for the U.S. Small Business Administration, said that regulations tend to “disproportionately” impact small business.

“It boils down to the fact that larger businesses, many times, are able to spread the cost out of more employees, compared to small firms that don’t have the ability to do that. They also usually have employees that handle those types of issues,” McDowell said, adding the SBA was able to save small businesses almost $11 billion in regulatory costs in 2008.

McDowell said the financial impact analysts could be done at minimal cost to the state.

Connecticut Department of Environmental Protection spokesman Dennis Schain said the department already adheres to the regulatory flexibility requirements, but would be open to amending the process.

“What the Legislature is looking at is changes in requirements for assessing impacts, and that’s something we’re glad to discuss.”