CA Small Businesses Hard Hit by President’s Budget Cuts
(Washington, DC) – As House Republicans fight over their stalled budget proposal, a recent report finds that small businesses received the brunt of the President’s budget cuts. Congresswoman Barbara Lee (D-Oakland), along with the other Democratic members, released a report analyzing the impact of the FY2007 budget on small businesses, including those in California. The report found that the administration has once again proposed cuts and eliminations to small business programs by a disproportionate amount. The FY 2007 budget request reduces funding or terminates 75 out of the 100 government-wide small business programs, affecting every portion of the small businesses community.
“Small businesses are the drivers of this economy and it is unacceptable that the President’s budget proposal does not give them the tools they need to be successful,” said Lee. “This nation’s 23 million small businesses need a budget that reflects their value to the economy. The President’s proposal simply does not do this.”
The report found that nearly 40 of the small business programs in this year’s request were cut by over 80 percent, with nearly a half of the 100 small business programs slated for termination. Adding to the disturbing trend is that the agencies that administer the highest number of programs that provide assistance to small businesses – the U.S. Department of Agriculture (USDA), the Small Business Administration (SBA) and the Department of Labor (DOL) – all received significant cuts. While the Bush administration claims the cuts are necessary, the spending cuts to the small business programs make up a mere 1.5 percent of the total $423 billion U.S. budget deficit. For every dollar that is invested in a number of the small business initiatives, three dollars are generated in tax revenue, raising concern as to why small firms are increasingly targeted.
Since the President took office in 2001 he has cut small business programs by $10 billion – cutting these initiatives by nearly $6 billion just this past year. The report also points out that while the average cut per program is over 60 percent; these savings only represent a mere 1.5 of the national budget deficit.
The Minority Business Development Agency (MBDA), which provided California organizations with $1.0 million in financial assistance in FY05 to assist in the establishment and growth of local minority-owned businesses and the Community Development Block Grants (CDBG), which brought in $526.6 million in FY05 for community rebuilding and revitalization projects in California, are both slated for cuts. The 7 (a) Loan Program, which provided 11,729 loans to California businesses, totaling over $2.6 million, is slated to receive no funding, while the Microloan Program, which provided 150 loans totaling more than $2.2 million as well as more than $5.5 million in technical assistance, was slated for elimination.
“This budget does not represent the priorities of small businesses,” said Lee. “With a number of these programs, for every $1 dollar invested, $3 dollars are generated in revenue. By not giving small businesses the tools they need, the nation’s economic growth potential is threatened. We need to fight for this nation’s small businesses and work to see them succeed, together American can do better.”
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