U.S. Rep. Mick Mulvaney held a formal congressional hearing in Rock Hill on Thursday to hear small-business leaders’ stories about how government regulations and changes in health care impact them.

As chairman of a House small-business subcommittee, Mulvaney, a first-term Republican from Indian Land serving South Carolina’s 5th District, called the field hearing and invited area small-business leaders to testify.

Dedicating the “manpower” to ensure compliance with changing regulations, knowing when regulatory exemptions or tax credits exist and where to find them, and struggling to fulfill requirements which some argue place more burden on small businesses, reducing their competitiveness, were some concerns shared by those who testified at the hearing at Rock Hill City Hall.

The benefits of some regulations also came up, and before the hearing closed, Mulvaney emphasized that not all regulations are “bad,” including those regulating safety in the workplace and in food and drugs and those that “keep our financial markets transparent.”

But others create costs and burdens that go “above and beyond” protecting the public. They “disproportionately hinder small businesses” of fewer than 500 employees who are “not always capable of making their concerns known,” Mulvaney said.

Charles O’Cain, a retired U.S. Air Force colonel and owner of Owl Business Advisors in Rock Hill, said that many of his clients are small-business owners wanting to win government contracts but can’t because they don’t know how to navigate the complicated process and don’t have time to figure it out.

The result is that many more contracts go to larger businesses while small businesses don’t have a chance to compete.

Small businesses are at a disadvantage, O’Cain said, because they lack “the vast resources to draw on” that larger companies have.

Questions about health law

Doug Meyer-Cuno, president of Carolina Ingredients, which manufactures and distributes spices and blended food ingredients, said he’s concerned about what he doesn’t yet know about how meeting new requirements of the Patient Protection and Affordable Care Act – President Barack Obama’s signature health care law – will impact his company of 37 employees.

Mulvaney asked Meyer-Cuno if he knew about a tax credit for health insurance costs available to small businesses if they meet certain criteria. The credit is one provision of the health care law.

According to a study done by the Government Accountability Office, about 170,000 small businesses claimed the Small Employer Health Tax Credit in 2010, designed to help small businesses provide health insurance to their employees, while 1.4 million to 4 million were eligible. The credit is available to small businesses with fewer than 25 full-time employees, according to the GAO.

Some didn’t know about the credit, and others said it was too difficult to qualify for or not worth the money, Mulvaney said.

Meyer-Cuno said his company didn’t know about the credit, but didn’t have the resources to find it.

“Laboring through such a maze would be very complicated, and at this time we just don’t have the manpower,” he said.

One of his options, Mulvaney said, would have been to hire someone to look into the law, but that would have had a cost the company would have had to consider.

“Not only that, but you don’t know what you don’t know,” Meyer-Cuno added. “So if you don’t know it exists, you can’t hire somebody to go find something you don’t know is out there.”

The health care law will require businesses of more than 50 employees to provide health insurance or face penalties.

Mulvaney raised the concern that some small businesses might avoid growing in order to avoid new requirements taking effect when they reach a certain size.

Avoiding regulation

Mulvaney asked Meyer-Cuno whether he would reconsider expanding his business if it meant avoiding new regulations, and Meyer-Cuno said that when his company reaches the size threshold, he might consider creating a separate company to hold employees to avoid the new requirements.

“I don’t think members of Congress fully understand the unintended consequences of making rules that apply to companies that are above or below a certain size,” Mulvaney told The Herald after the hearing.

Making laws that apply to larger companies while saying they’re too burdensome for small companies forces “businesses to do something they didn’t have to do before which is measure whether or not they want to add that 50th or 51st employee,” he said.

Frank Knapp, president and CEO of the South Carolina Small Business Chamber of Commerce, wasn’t at the hearing, but has been advocating for health care reform at the state level for more than a decade in response to businesses’ concerns over the high cost of health insurance, he said.

He supports the new health care law, though he says many people don’t know some of its details. The law exempts small businesses with 50 or fewer workers from providing health insurance to employees and offers tax credits, reasons he supports it, he said.

On the idea that a business might not expand to avoid added regulation, Knapp said the occurrence of that would be “infinitesimally small” compared to the businesses benefiting from the law.

Need more buyers

Monty Felix, owner of Alaglas Swimming Pools in Saint Matthews, spoke mostly about regulations at the hearing.

It doesn’t make sense that he has to report emissions to the state health and environmental agency at the same frequency as larger companies whose production and emissions are far greater, he said.

Suffering losses in 2008 and having to cut employees to stay afloat, Felix now hopes the economy – and demand for his products – will pick up. Not having to spend money meeting new regulations will help him grow his business, too.

When his business rebounds, providing his employees with health care would be something he would consider, but a tax credit isn’t the solution, he said.

“I don’t need a tax credit,” he said. “I need somebody to buy a swimming pool.”

Jamie Self 803-329-4062