Last week, Forbes Magazine ranked Washington as the fifth-best place for business in the nation. However, the small business community views the Washington State business climate very differently and says more needs to be done before anyone in Washington should feel good about our business climate.

First, in looking at this ranking, let's consider Forbes Magazine. It's a long way from Wall Street to Main Street and while Forbes can be a great business resource, it clearly is more focused on the largest corporations and far less on the 300,000 plus businesses that operate in Washington. Case in point... in Forbes' own article on the rankings, Boeing, Microsoft, Starbucks, and Amazon.com are mentioned. These businesses operate in a very different "world" than the average small business in Washington.

Second, in looking at what was evaluated to determine the rankings, we need to take a more careful look at the first category - "business costs." Washington ranked 33rd in business costs (which include labor, energy and taxes). This means that 32 other states are better than Washington in those areas, including all states that ranked higher overall. For small businesses, business costs are the number one problem in their business. Labor costs include wages, benefits, workers' compensation, Social Security taxes, Medicare taxes, unemployment taxes and much more - and Washington's costs significantly outpace those of other states. Our business taxes are considered very high, particularly when you factor in the state business occupation tax which is a tax on gross receipts and equivalent to a 15 percent business income tax (that would be about the highest in the nation).

The people giving themselves high fives for our number 5 ranking brought up the fact that energy costs are low but failed to mention that larger businesses pay the lowest energy costs and small businesses pay the highest energy costs - much higher than larger businesses and higher than what residential consumers pay.

Small business owners love this state and are people like you and me who want to live here, raise children here and retire here (hopefully). They usually earn about the same amount as their employees plus they perform a valuable community service because they are providing jobs for other people. So the question we ask is why do Boeing and other big businesses get tax breaks (such as over $3.2 billion to build the 787 in Washington) and other benefits while small business is ignored? If our elected officials truly addressed the real needs of small business, Washington could sit firmly and squarely on a number one ranking!

Eighty six percent of all businesses in Washington are small businesses with 49 or fewer employees. These small businesses created 44,129 jobs from 2001-2004 while large businesses laid off 77,521. That's a very real indicator of the value and economic horsepower of small businesses. Small business owners, who keep their business profits here, also coach little league, volunteer in the community, contribute to our causes and keep our communities humming. They deserve better than a number 33 in business costs.

Small businesses need real health care reform that will actually reduce costs and increase access. Real small business solutions are needed for workers' compensation and taxes, including tax equity with large firms (like Chicago-based Boeing) so the costs are not so out whack with the average small business profit margin. Small businesses' proposed solutions in these areas fall on deaf ears. And, while Washington received many accolades from Forbes for its regulatory assistance programs, more work needs to be done at the state agency level to extend this assistance to small businesses so they are truly receiving the help they need to comply with the estimated 100,000-plus regulations they must deal with everyday.

Far too many small business owners question if our government officials really care about small businesses as well as big businesses. Big businesses make the headlines but small businesses are the backbone of our state's economy. As C. Paul Sandifur Jr., president and CEO of Metropolitan Mortgage and Securities Co. was quoted in the Spokesman Review just before he moved his business from Spokane to Idaho, "Idaho has a can-do, will-do attitude that we really like...Our feeling is that Washington has an adversarial feeling toward business." Idaho is right behind us with a number 6 overall ranking by Forbes and is 22 states better than Washington in terms of business cost. Our Washington state leaders must make Washington a better place for small business not just large business.

Gary Smith is the Executive Director of the Independent Business Association representing over 4,000 small and independent business owners in Washington State and can be reached at 425.453.8621.