STATEMENT
of the
Honorable Nydia M. Velázquez, Ranking Member
House Committee on Small Business

Today’s consideration of the Committee’s Views and Estimates on the SBA’s budget proposal could not be happening at a more critical juncture. In recent months, it has become clear that the economy is showing progress on many fronts. However, employment gains are lagging and it is in this respect that the SBA can play an important role.

Unfortunately, the SBA continues putting its own unauthorized programs ahead of other proven initiatives. This includes seven initiatives at a cost of more than $15 million. Yet, no performance metrics accompany these sizeable requests. We all need to tighten our belt and it begins with proposals like these.

Just as the administration is creating its own programs outside of the legislative process, it is defunding initiatives that have a documented pattern of success. The SBDC program, for instance, which saw its core budget cut by $10 million, produces nearly $3 dollars in federal revenue for every dollar spent. It simply makes no sense to divert money from reputable programs and give it to the agency’s untested projects.

The SBA also continues picking which programs to administer and which to overlook. It sees fit to implement the 504 refinancing and the Intermediary Pilot programs, even though they risk taxpayer dollars excessively and offer little in the way of a meaningful job creation. And, over the past five years, the SBA has dumped millions into an ineffective IT system – the Loan Management Accounting System. But, when it comes to other initiatives, such as the Increased Veteran Participation Program, which was passed into law three years ago, the agency can’t find any money.

Little attention is also paid to solving SBA’s most pressing problems, such as the ongoing fraud in its contracting and delegated authority in its lending programs. If we are going to spend additional money, it should go toward cleaning up waste and abuse -- so that the agency’s existing programs actually work and help small businesses.

With regard to the majority’s views and estimate letter, I support several provisions. The letter recommends the elimination of several unauthorized pilot programs, as well as the questionable initiatives created in the Small Business Jobs Act of 2010. It is correct to terminate those programs, as they have not demonstrated any value to the taxpayer.

However, there are several areas of concern. By proposing to eliminate funding for the Veterans Business Outreach Center, it is limiting the ability of the 190,000 Iraq and Afghanistan veterans to launch their own businesses.
Veterans, who have a high rate of entrepreneurship, need more outreach, not less -- regardless the cost. As we seek to tighten the SBA’s belt, we should not be doing so at the expense of those who have already sacrificed so much for our nation. On this basis alone, Members should take pause in adopting these views.

With regard to ending frivolous programs, we missed an opportunity to send a clear message on the administration’s proposed SBIC subprograms. The views letter sends inconsistent signals by first stating that funds should not be made available for these initiatives. Then, it seemingly contradicts itself by stating that, if a new program is created, the SBA should do so with a separate credit subsidy rate. This gives the agency at least tacit approval to go forward with this unauthorized project. As a result, the views are permitting the exact sort of wasteful spending that we are concerned with stopping. I oppose this and all other wasteful unauthorized programs in any form -- and that will be clear in our own views.
As we all know, it is not uncommon to disagree on budget priorities. While the Chairman and I may not fully agree on our views, I think it is clear that we are both disappointed in the agency’s priorities. The inconsistency in its funding request is indicative of an agency that needs to rethink its priorities.

Just as the recent downturn required entrepreneurs to think more strategically, the SBA should be doing the same. What this Committee needs to see is a refocusing on initiatives that have positively impacted business owners -- while giving taxpayers a reasonable return on their investment.

Thank you. I yield back.

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