The state of small business in Texas

Published 12:00 pm Thursday, June 6, 2019

Annie Spilman

Small business, the mom-and-pop shops that drive our economy, came out of this year’s session of the Texas Legislature OK.

Not great, not awful, but OK.

We scored some big wins on issues such as workforce development and property tax relief, but legislators let us down on one critical issue: stopping cities and counties from going beyond what the state already requires and creating a patchwork of overreaching rules and regulations that can make it harder for small businesses to grow and create jobs.

Workforce development

One of the biggest challenges facing small businesses here is finding good workers.

According to NFIB’s latest jobs survey, 86% of U.S. small businesses who want to hire say they’re having trouble finding qualified applicants.

This session, the Texas Legislature passed 17 separate bills to improve workforce education programs in our schools. I believe these measures are going to help small businesses and large corporations alike find the workers they desperately need while strengthening our economy and reducing unemployment.

Tax relief

Property tax rates have become a perennial problem in Texas. We’d gotten to a point where property taxes were rising faster than people’s incomes. That hurts everybody, but it could be devastating for small businesses. They could either raise prices or cut jobs to offset the rising expense or close up shop.

House Bill 3 was primarily a school funding bill, but it also cut property taxes by $5 billion. It gives voters a greater say in property tax rates and imposes a local cap so property taxes can’t rise above a certain level.

One problem the legislature didn’t fix this session was phasing out Texas’s onerous franchise tax. This is a “privilege tax” imposed on employers simply for doing business in the State of Texas. Many states have already repealed their franchise tax laws. NFIB is urging legislators to add Texas’s name to the list.

Healthcare mandates

Healthcare mandates are specific benefits that employers are required to provide to their workers. NFIB generally opposes these mandates because they drive up the cost of health insurance for everyone.

Texas already has 41 healthcare mandates, and this session, legislators introduced bills that would have doubled that number.

Each of these mandates, however well-intentioned, was expected to raise health insurance premiums 1% to 5% across the board, making it harder for small businesses to offer health benefits to their employees.

Regulatory overreach

This is where we expected legislators to stand up for small business.

NFIB joined other business groups in pushing for legislation that would have stopped cities and counties from imposing their own employment ordinances that go beyond what the state requires when it comes to issues such as paid leave and predictive scheduling, a relatively new mandate which penalizes employers who need to change workers’ schedules at the last minute.

The legislature’s failure to act on regulatory overreach by city and county governments is a big concern for small businesses. Local ordinances create all kinds of headaches and confusion. It’s hard to follow the rules when the rules can change from town to town, from one store to the next.

NFIB is challenging the constitutionality of Austin’s paid sick leave ordinance, and we’ll continue to fight these local ordinances in court until the Texas Legislature decides to act.


Annie Spilman is Texas state director of NFIB, the nation’s leading small business advocacy organization. She lives in Austin.