Local business owners share worries about taxes, cost of healthcare [The Pantagraph, Bloomington, Ill.]

March 24--BLOOMINGTON -- Scott Baum owns and operates Baum Chevrolet in Clinton, where his 70 employees are part of a group insurance plan.

"I've always taken care of a pretty big portion of the health insurance at the dealership because I believe it's a benefit that keeps good people in long term," said Baum, who also employs about 30 other people at Ted's Garage, a Clinton restaurant.

But every year, paying for essential benefits like health insurance is a major concern, he said, because he doesn't know what premiums are going to look like. He declined to disclose how much his businesses pay, but said it's a significant expense he watches closely.

"It's one of those things we want to keep doing," Baum said. "It's always a concern, and there is uncertainty from year to year."

His concerns are shared by others. A January Gallup/Wells Fargo Small Business Survey found 54 percent of small business owners believe health care costs are hurting their business "a lot," while 53 percent said taxes on small businesses were. Since 2003, the study has surveyed small business owners on their perception of their financial situations.

That uncertainty surrounding whether taxes may rise and the potential effects of the federal Affordable Care Act may cause businesses to be cautious about expansion, said Terry Noel, associate professor of management and quantitative methods at Illinois State University.

"It is hard enough to plan years into the future when taxes and other laws are well-known and stable over time," Noel said. "When business owners are not sure what tax policy will be and how their health care costs will be affected by Obamacare, it is near impossible. Excess caution kills growth."

But Baum said while he keeps a close eye on how business taxes and health care expenses affect his endeavors, he does not feel those costs have held back any planned hiring or expansions.

On the other hand, Tom Mercier, president of Bloomington Offset Process Inc., said such concerns have weighed heavily on his mind. With 55 employees, Mercier said health care costs represent about 7 percent of his payroll expenditure, and payroll taxes represent another 7.25 percent.

"There's a real good reason people aren't adding people and expanding," Mercier said. "They don't have the necessary capital to do it. It's either going to the state of Illinois or the federal government."

Smaller businesses may have a harder time adapting to such costs. Dotti Bushnell, a co-owner of The Garlic Press in uptown Normal, has seen the kitchenware store evolve considerably since she opened it in 1976. For the past six years, it has also offered an adjacent dining area, the Garlic Press Market Cafe.

One considerable administrative cost, Bushnell said, has been health care for employees. Bushnell said her businesses don't have enough employees to enter into a comprehensive insurance program like larger corporations often administer for their employees. She said The Garlic Press employs about 35 people, most of them part time.

The Garlic Press subsidizes one-third of the cost of insurance plans that some full-time employees purchase on their own, she said. She said expenses would be lower if she could enter everybody into a program or if the government would go to a single-payer system.

"I think it's really too bad that only bigger businesses have the choice (to bargain for less expensive insurance programs)," Bushnell said. "I wish we could, because it's much cheaper."

Those kinds of concerns spurred the McLean County Chamber of Commerce to form the Employers' Coalition for Healthcare Inc. in 1994, which allows chamber members to bargain collectively for health insurance. A total of 175 area businesses are currently members, said Business and Relationship Manager Brian Thede. Among benefits members get are a 3 percent discount with insurer Health Alliance, he said.

"Business owners are going to be concerned about this kind of thing, especially going forward into next year because there are provisions of the Affordable Care Act that are really going to take hold at the end of this year going into 2014," Thede said.

Denise Geske, a co-owner of Fox & Hounds Hair Studio and Day Spa in downtown Bloomington, said the arrangement helps her business manage the costs of health care that continues to get more expensive each year. She said the business spends from $9,000 to $12,000 monthly on health care premiums for its 38 employees.

"We had some claims on our policy, and I'm sure had we been an individual business, there's no way I could've continued to provide this benefit to my staff members," Geske said.

Others say staffing decisions and the taxes and benefits costs they bring aren't anything new, and have been a constant concern over the past few years of recession. Baum said taxes and other administrative costs can sometimes make an entrepreneur feel it is difficult to get ahead.

"For staffing, for any small business, your biggest asset is your employee, but also, you can't over-hire," Baum said. "Everybody has to stay lean on the employment fronts because of employment taxes we have."

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