BRATTLEBORO — Gov. Phil Scott has signed the state's $7.315 billion budget, authorizing state spending on small business pandemic relief, career and technical education programs, housing, and tourism and marketing.
Included in the FY22 budget, which goes into effect July 1, is an initiative to support the development of businesses operated by Black, Indigenous, and people of color (BIPOC).
“This piece of legislation really addresses the BIPOC business community and entrepreneurs in a way that will contribute to expanding our economy,” said Curtiss Reed Jr., the executive director of the Vermont Partnership for Fairness and Diversity.
The budget allocates $150,000 to hire a contractor to assemble BIPOC-business owners, organizations, and state agencies such as the Agency of Commerce and Community Development (ACCD) to “create a set of recommendations on how to support BIPOC business development.”
These recommendations may include the creation of a business network or commission.
For Reed, supporting BIPOC business owners is about expanding Vermont's economy and keeping more of the money the state awards in bid contracts within Vermont.
“Once [state dollars] leave the state, they leave the state,” said Reed.
“What if we had more robust contracting with BIPOC businesses?” Reed added.
“That would mean that those dollars on those contracts would stay in Vermont much longer because they're hiring people, they're paying rent, [and] they're purchasing goods and services locally,” he said.
'Benign neglect or willful ignorance'
The final legislation to assist BIPOC businesses started with a survey conducted by the Vermont Partnership for Fairness and Diversity, said Windham County representatives Sara Coffey, D-Guilford, and Mike Mrowicki, D-Putney, who sponsored the legislation and helped shepherd the initiative through the process.
The lawmakers said their initial legislation relied on 2020 survey information from the Partnership.
According to the preliminary survey results published on the Partnership's website last December, the survey was designed to solicit the level of interest in creating an organization to serve BIPOC business owners.
Seventy-five business owners working in 13 sectors responded to the survey.
In its major findings, the Partnership stated that a presence of “benign neglect or willful ignorance” on the part of existing business organizations and a lack of organizational infrastructure were hampering the BIPOC business community's growth.
A majority of respondents did not belong to a chamber of commerce or business association.
Such organizations in Vermont “have failed to welcome, on the one hand, or make a convincing argument, on the other hand, for BIPOC business owner membership,” wrote the Partnership.
More than three-quarters of respondents said Vermont needed a government-sponsored commission to support the expansion of the BIPOC business community. Respondents ranked access to capital and the “need for a mutual support network” as top priorities.
“Organizations such as the Vermont Commission on Women, the Center for Women and Enterprise, and the Vermont Women's Business Center stand at the ready to provide information and technical assistance to women-owned business,” wrote the Partnership. “We believe a BIPOC business-focused organization would give ourselves a competitive starting point.”
From idea to the state budget
How the survey results started with the filing of one House bill and then moved through the House, the Senate, and finally into the state budget is a reminder of the circuitous route that policy building can take.
Coffey and Mrowicki served as lead co-sponsors on the legislation, which attracted 21 other sponsors. It was referred to the House Committee on Commerce and Economic Development, where it was introduced on Feb. 24.
The committee rolled it into another Coffey-introduced bill with a broader scope - community and economic development and workforce revitalization - which then moved through multiple committees and on March 30 crossed to the Senate.
There, the Senate added the spending to the state budget, a separate bill - House Bill 439, a.k.a. “the Big Bill.”
The budget language that authorizes spending on the business initiative states that the effort addresses a “history of inequity” and racial wealth disparities by providing more economic opportunities and business supports for BIPOC business owners.
These disparities can show up as a lack of access to income, but they also make starting and maintaining a business difficult.
As stated in the budget bill, “Vermont embraces its responsibility to course-correct the historical impact of economic exploitation and exclusion from opportunity due to race and ethnicity for American descendants of slavery and the broader Black, Indigenous, and Persons of Color community.”
The legislation also provides $150,000 for the Agency of Commerce and Community Development to hire one or more contractors to work with members of the BIPOC business community, community leaders, business organizations, and state agencies and to build a set of recommendations for the state to act upon.
These recommendations could include launching a BIPOC business network or creating a minority business development center.
A request for proposals to find consultants is due from the ACCD in collaboration with the Office of Racial Equity by Aug. 15. Once hired, the contractors would start their work by Oct. 15, with a preliminary report due by Feb. 15, 2022.
The proposed legislation also charges the secretary of state's office to collect data related to race, ethnicity, and gender when people register their businesses with the state.
This data can be shared with other state agencies so they can inform economic development policy or strategies that relate to BIPOC-, women-, and gender-nonbinary-owned businesses and their needs.
Expanding Vermont's economy
“There are those that will look at the legislation and say, 'Oh, this is about building wealth for BIPOC business owners,'” Reed said. “And, yes, that is also true, but it's not the impetus for my bringing this to the attention of the Legislature.”
Rather, “It's about a much bigger pie relative to our struggling economy, where the dollars fly out the door and are not returned,” he said.
One of the goals of the Vermont Partnership for Fairness and Diversity is to expand the state's economic pie, explained Reed.
To do so, the state needs more visitors and new residents, he said.
Attracting more members of the BIPOC community as visitors means more funding for the state through sales taxes such as the rooms and meals tax, he said.
And if these visitors decide to call Vermont home, they become active and ongoing economic contributors, Reed said.
Reed decided to conduct the business survey after reviewing the state's contracting process and noting who tends to win these contracts.
While the number of active contracts changes monthly, Reed said that when he testified before the Legislature this year, the number was 237.
Out of those, approximately 27 of the awarded bids - worth millions of dollars - went to Vermont-based businesses. The majority - just under 87 percent - were awarded to companies based in other states, including Maryland, Massachusetts, New York, or Connecticut.
The dollars attached to those contracts equal a small boost to the local economy of those businesses awarded such contracts, he said.
“So that's the rationale that I brought to the House and Senate - it's about our own self-preservation,” Reed said.
He also told lawmakers that to access the state contracting process, BIPOC business owners needed a better “roadmap” so that they can navigate the state bidding procedures.
“BIPOC businesses need the technical assistance, the capital, training - in some cases, specialized training - to be able to get the contract,” he said.
“Now, there is a [state] procurement office that provides that kind of holding your hand, walking through the process, but no one knows about it,” he continued.
Reed believes Vermont needs a more robust business network or a commission that would support BIPOC business owners - for example, by feeding them information on state contracts and the availability of funding, and by providing entrepreneurs a space to share ideas and support, he said.
Coffey echoed Reed, saying that when the Legislature put approximately $5 million in COVID-19 relief funding specifically for women- and minority-owned businesses, the process highlighted gaps in how the state connects with and serves BIPOC business owners.
“We saw really clearly how the word got out very efficiently to women-owned businesses,” Coffey said. “We did not see the same for minority-owned or BIPOC-owned businesses in this state.”
Coffey credited findings and recommendations from the Vermont Partnership's December survey with identifying the gaps and suggesting better business infrastructure.
Balancing statistics with safety
Reed noted that a couple of his suggestions didn't make it into the final state budget.
According to the bill, the cost of translating materials into other languages isn't considered an administrative cost and can't be paid for with the money appropriated in the Big Bill.
In Reed's opinion, translation costs should be an administrative cost.
Reed also said that as the legislation reads now, the secretary of state's office is charged with collecting only demographic-related data such as someone's race or gender at the time someone registers a business.
He believes the information should also be collected whenever a business interacts with the office - for example, when filing a corporation's annual report or when renewing a business or professional license.
On the other hand, Reed added, such data should be suggested and not required.
Choosing to divulge personal information is an important option for BIPOC business owners because it is about safety, Reed said.
Business filings with the Secretary of State are public documents, meaning that someone with malicious motives could potentially use the information to troll, harass, or commit violence against these business owners, he said.
This is another reason Reed said the statewide approach to supporting BIPOC businesses needs to be multilayered and include state-level and business-level solutions.
Reed added that while most Vermont communities have local chambers of commerce or business associations, such groups might not connect with the needs of BIPOC-business owners or they might be outright unwelcoming.
“In some cases, they need to clean up their own shops,” Reed said of some chamber members that hold perspectives that run contrary to social-justice efforts, such as “tracking to the far right, or that espouse the litany of victimization by the 45th president.”
“So when chambers of commerce do not stand up to racial injustice or social injustice - whatever form it takes - it says to the BIPOC community in general, and the BIPOC business community specifically, that it might not be safe for [a BIPOC businessperson] to be part of that organization,” he said.
Next steps
The next step for the BIPOC business development effort is for the state to issue a request for proposals and hire a contractor or contractors.
For Reed, the big picture is about attracting more people of color to the state and addressing the business community in a way that contributes to an expanding economy.
“We want to be known as the most inclusive and equitable destination on planet Earth,” he added. “It's in our best economic interest not to let those dollars flow out the door.”
And, he said, “It's also an opportunity to bring more BIPOC businesses into the mainstream of the state's economic life.”