News From Congresswoman
Nydia M. Velázquez
Representing New York's 12th Congressional District - Brooklyn, Manhattan, Queens
Ranking Democratic Member, House Small Business Committee

For Immediate Release
February 16, 2005

CONTACT: Kate Davis, Allyson Ivins, (202) 225-4038

Small Businesses Continue to be Hard Hit in FY 2006 Budget Request
Small business programs government-wide receive severe cuts and eliminations

WASHINGTON - Congresswoman Nydia M. Velázquez (D-N.Y.), Ranking Member of the House Small Business Committee, today joined her Democratic colleagues to release their annual report analyzing the impact of the FY 2006 budget proposal on small business programs government-wide, which found small business programs again bearing a disproportionate amount of cuts in the budget.

"Every year when I think the budget can't get any worse, a new budget is released and proves me wrong," Congresswoman Velázquez said. "The administration's FY 2006 budget request - for a third year in a row - calls for near-record deficits, and provides a fiscal plan based on flawed social security and tax initiatives, which will be far from putting our nation's economy on the right track. And the worst of all is what this budget does to small businesses and entrepreneurs."

Out of the 100 programs government-wide that offer small business assistance, such as access to affordable capital, entrepreneurial development and technical assistance, this year's report documents over 50 of these programs, up from 35 last year, that were slated for severe cuts or elimination. The overall average cut for these programs is nearly 80 percent, up 10 percent from the 2004 budget, with 16 programs facing severe funding cuts and another 35 slated for termination. Agencies hit the hardest were Small Business Administration (SBA), with 14 programs; Department of Agriculture (USDA), with 12 programs; and Housing and Urban Development (HUD), with 8 programs.

"Small business owners are already being told that they have to do more with less," Congresswoman Velázquez said. "But with massive cuts to many essential programs - the majority of which have been flat funded - this means that they are already expected to meet a growing demand with the same amount of resources. Clearly there are some hard realities driving our nation's spending choices - a struggling economy, a growing deficit, our involvement in Iraq and war on terror. But the truth is these cuts are simply unrealistic."

In analyzing the cuts, the report found that due to the fact that the bulk of new cuts are concentrated at HUD, USDA, and SBA, those small businesses centered in rural or urban areas would be the hardest hit. The report also points out that while the average cut to those programs is 80 percent, these savings only represent a minuscule quarter of one percent of the entire budget. These severe cuts are especially concerning given that many of these programs put money into the Treasury in excess of the government's initial investment. Finally, the report concluded that the remaining programs, many which have been flat funded for several budget cycles, will not have the ability to fill the gaps left by the over $6 billion in cuts proposed to small business programs in this budget.

Representative Velázquez said, "Any way you look at it - percent of cuts, dollars, or numbers - this is a bad budget for small business."

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