It is harder than ever to run a small business in New York City. The cost of doing business here is the highest in the country. On top of that, the number of violations and fines imposed on small businesses throughout the city, and especially in the outer boroughs, has skyrocketed. To make matters worse, it seems unlikely that this trend will reverse anytime soon.
Reports have emerged that several years ago the Department of Consumer Affairs instituted a “25 percent threshold” for their inspectors, meaning they’re expected to average one violation for every four businesses they inspect. This has led to a proliferation of fines for minor violations that could easily be remedied, such as signage issues or litter. Often unable to afford legal recourse, small business owners, especially immigrant merchants, have been vulnerable to such actions.
As a result, in 2012, the city generated $66.2 million in fine revenue from small businesses, up from $12.6 million in 2002. These additional funds have been used to plug budgetary gaps and have contributed to the passage of on-time, balanced budgets over the past few years. In fact, the revenue generated from small business fines seems to have become a requirement of the city’s budget, necessitating city commissioners to produce their target revenues and force their inspectors to comply.
The continued use of city agency inspectors to generate city operating revenues is a horrendous abuse of small businesses, which too often forces them to shutter and ultimately results in an overall negative effect on jobs and city revenue. This cannot be permitted in the next administration and city council.
The mayoral candidates have recognized the need to address the punitive regulatory environment and have expressed their commitment to reducing this burden on the small business community. However, given the realities of New York City’s fiscal situation as well as the expenditure demands on the city budget, the status quo is unlikely to change substantially.
According to the Partnership for New York City’s “NYC Jobs Blueprint,” by 2015, the city will face at least a $2.4 billion budget shortfall, owing in large part to the explosion in pension and health care costs. Unfortunately, efforts to reform these systems have gone nowhere. The higher these costs grow, the fewer resources the city will have to support essential services and the more reliant it will be on alternative revenue streams, such as small business fines.
Our next mayor and city council need to prioritize getting New York City’s fiscal house in order. New York City budgets must cease requiring commissioners to produce exorbitant levels of revenue from fines. Only then will we be able to appropriately address the burdens facing local merchants across the five boroughs. The future of our small businesses is in their hands.
Maureen Regan is the vice president of the Queensboro Hill Neighborhood Association, founder of Green Earth Clothing and Green Earth Urban Gardens, and a proud supporter of GoBizNYC.