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The House Committee on Economic and Small Business Development met on May 15 to hear invited testimony on Hurricane Harvey economic and workforce impact; and to monitor agencies and programs under the Committee’s jurisdiction.

This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. This report is not a verbatim transcript of the hearing; it is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

 

Albert Zalgado, Texas SBDC Network

  • SBDCs provide business owners with consultation on how to develop their business
  • Many of those in our network were overwhelmed in Hurricane Harvey
  • There were 362,000 businesses in the affected counties
  • Those small businesses employed over 5 million workers
  • FEMA estimates 40% of all small businesses never reopen their doors after a disaster
  • SBA has received over 11,000 completed business disaster loan applications, and approved over 3,000
  • What happened to the 90,000 that did not submit applications?
  • Labor costs and availability are the primary obstacle for local businesses
  • Harvey exacerbated our longstanding workforce problem
  • Housing, workforce, access to materials and capital are the greatest challenges
  • Clients denied by FEMA were then told to go to the SBA
  • Most were distraught and did not seek additional help beyond FEMA
  • Clients were focused on survival and shelter
  • Being asked to complete online forms was often too complicated for clients
  • It was difficult to communicate with small businesses due to the chaos of the storm
  • SBDC’s vision for long term recovery includes,
    • Intense counseling
    • Education and mentoring delivered in a systematic and collaborative approach
    • Business planning
    • Health and reconstruction
    • Management and technical assistance
  • Ortega – You indicate in the written testimony that there were over 11,000 applications for disaster loans but only a small number were approved. Why is that?
    • That is something we have asked the SBA. We want to understand it better also
  • Ortega – Hopefully these people will be helped?
    • After the fact we lose a lot of opportunity to access capital. These businesses know what to do when something like this happens. If we don’t assist these companies, it will impact the state economy
  • Button – You’re suggesting that instead of giving these impacted businesses a complicated process, they want someone to help walk them through. They want to follow through with these applications, but it is not practical for them.
  • Leach – One of the things we’ve seen in the wake of disaster is fly-by-night contractors. What are you seeing regarding this?
    • We certainly ran into these problems

 

Sophie Macey, Lake Houston Area Chamber of Commerce and TX Association of Businesses

  • Our business (Bayou City Interpreting) services students with interpreting needs. When schools closed, we were out of work
  • My small business could not find anyone to loan us money
  • A financial advisor put us in contact with Mike Mitchell of the Lake Houston Area Economic Development Partnership. He introduced us to Lift Fund which allowed us to stay afloat
  • My story is not unique – many businesses struggle with the same issues

 

Brian Daniel, Economic Development and Tourism, Office of the Governor

  • Several measures have been taken to aid Harvey recovery
  • We have stayed in contact with chambers and other economic assistance organizations
  • We know there is not one best fit for every company
  • We continue to remain in contact with these affected companies
  • Button – The governor serves as a role model for other governors across the nation because of his decisiveness and ability to act. Let’s switch gears to your agency reporting
  • With the storm and recovery, we were primarily concerned with the state’s growth in GDP and the number of new jobs created
  • In the 4th quarter of last year, we led the nation in GDP growth
  • In 2018, we created 111,000 new jobs
  • Texas’s economy is strong
  • Business activity is up year after year
  • In March, we received our 6th consecutive award for number of businesses created in the state
  • Recently, Chief Executive Magazine surveyed CEOs about which state was best to do business in and Texas came out on top. I believe we have remained on top for 14 consecutive years, the entire time they have done the survey
  • We continue to work with local communities to ensure deliverance of economic assistance
  • At the end of the day, the Texas workforce is in demand
  • Metcalf – Do you have an estimate on how many businesses were lost during Harvey that will not be coming back?
    • Not at this point, but that is something we’re interested in

 

Robert Cross, Houston Area Plumbing Joint Apprenticeship Committee

  • We reached out to the national building trades for training course funding
  • We began our first plumbers training class in November and completed in December
  • Additional classes are planned for Houston
  • We hope to see trade class expansion into high schools
  • Our course gives a good history of the building trades, as well as use with tools, OSHA training, mathematics, and blueprint reading
  • Hinojosa – Do you know if those who entered the program were unemployed?
    • The 20 who enrolled were unemployed
  • Hinojosa – They all received jobs afterward?
    • Yes
  • Hinojosa – Do you have the jobs set up before the class?
    • There is demand for plumbers in Houston. We work with contractors to understand their needs
  • Hinojosa – Are apprenticeship jobs for union only?
    • They can be, but not always
  • Hinojosa – What is your capacity?
    • There are 643 registered apprentices in Houston. In the Coastal Bend area, we have seen the program grow quickly.
  • Button – The average age of plumbers in Texas is 46
    • The average age in our program is 27
  • Ortega – Do you expect that this will continue to grow?
    • Yes
  • Ortega – This sounds like a great program

 

Karen Latta, Texas Workforce Commission

  • TWC established a telephone hotline specifically for Harvey claims
  • TWC hired additional workers to handle the claims volume
  • TWC had staff in the field providing information on disaster relief
  • Staff established a presence at community outreach centers
  • As of April 23rd, TWC has taken over 169,000 disaster related unemployment claims
  • Disaster Unemployment Assistance is a program funded 100% with federal money
  • TWC has paid out approximately $162.4 million to individuals affected by the storm
  • TWC has allocated funds to address industry needs associated with the disaster, specifically to help community and technical colleges with expansion to meet those needs
  • These allocations were informed by feedback received from stakeholder testimony
  • Hinojosa – Do you have a service that helps people identify how they can use their skills to become employed?
    • Yes, that is part of the dislocated worker grant funding. A person who has lost their job because of the storm can receive training and consultation

 

Aaron Demerson, Texas Workforce Commission

  • The Skills Development Fund (SDF) is the state’s primary job development fund
  • It assists employees in enhancing their skills and gaining new skillsets
  • In FY17 the program supported the creation of 2,771 jobs and over 11,000 current workers
  • The program has been around since 1996 and helped create over 111,000 jobs
  • The legislature made the SDF a part of the state’s incentive package in the passage of HB 2169
  • This ensures that if a company is looking to come to Texas, we can partner with a local community college to get potential employees the skills they need to work in that company
  • This has been used by companies in various industries