Sue Lani Madsen: Sometimes doing business the American way means dancing in a mindless bureaucratic ballet

Let’s say you want to start a new business after retirement. Something simple like lawn mowing. You tune up the riding mower, recruit your son to help, put up a few flyers around the neighborhood, and start making money.

Now let’s assume you want to do it the American way. You get a business license and liability insurance, check state and local regulations. You commit to operating by the book. You set up an L&I account to pay the required taxes and state insurance fees. An entrepreneur is born. And then you get a call for an audit.

Steve Busch got that call. He retired after 24 years working with supported employment for people with disabilities, and is no stranger to government paperwork. The L&I auditor called to set up an appointment at Busch’s office, the kitchen table.

“The records showed we had overpaid $10 one month, and the auditor said we could be fined for the reporting error,” said Busch. “He said it didn’t matter that we’d overpaid, a reporting error is a fineable offense even if the error is in their favor. And they wouldn’t credit the $10 because they don’t do refunds.”

A $10 refund offer capped our own four-month bureaucratic ballet with the USDA. It started with an interpretation of a rule to require the ranch to be a licensed dealer under the Animal Welfare Act before we could sell goats to one of our customers. We applied for the license in November and paid the $10 processing fee.

The bureaucratic machinery kicked out identical letters in December and January, re-setting the “within ten business days” deadline for a USDA response with each letter. Two inspectors called trying to figure out whose bailiwick our business belonged to.

A sympathetic bureaucrat tried to help but after more calls, emails and no progress, we gave up. Instead we found a legal loophole to work through an already licensed dealer, but at the cost of swallowing the dealer’s markup of more than $400 on an already slim profit margin.

Then a notice showed up in the mailbox for a certified letter. It was a 15-mile drive one way to the post office to sign for it. Turned out USDA spent $6.80 to send a certified letter to tell us they had belatedly re-interpreted the rules. We don’t need a license after all, and we could send in the enclosed paper form to be reimbursed our $10 application fee electronically.

USDA could have emailed. We would not have been dismayed at losing $10 to compensate the government for the effort, muddled as it might have been. But the process apparently dictated a refund must be offered by certified mail, regardless of the size. Nowhere in the process did anyone ask if this made sense.

Apollo Fuhriman, Region 10 Advocate for the Small Business Administration Office of Advocacy, has been hearing these stories for two years.

“A lot of the problems are from changing technology outpacing agency processes,” said Fuhriman. He spends as much time explaining regulatory reform to frustrated bureaucrats trying to make the government machinery work as he does advocating for exasperated small business owners.

“Agency staff know where the problems are. But sometimes they don’t realize they can change administrative processes internally.”

Sometimes the challenge is to eliminate redundancy by taking advantage of the ability to store and retrieve information. Fuhriman pointed to several SBA programs requiring repetitive investigations and certifications every time a new loan or program application was filed or contract issued. It’s the bureaucratic equivalent of filling out the clipboard at the doctor’s office at every single visit, and then again in the exam room, and again at the pharmacy counter.

“Some agencies take advantage of the climate of change to address things that have been bugging them for years,” said Fuhriman. “Others are stuck on tradition.”

His group is making progress, albeit slowly since confirmation of the new director of the SBA has been held up in the U.S. Senate for two years.

Everyone has a true story of stultifying, tedious, rule-driven bureaucracy at some level of government. Busch’s biggest frustration with the state L&I auditor wasn’t the $10 overpayment. It was the auditor’s disinterest in draining his own agency’s swamp.