People - August 2006

She snips red tape tangling small biz
by Chris Richter

Gail McDonald helped six disgruntled bakery owners figure how to work with state government to hang on to their dough. As the first small-business ombudsman for the N.C. Department of Commerce, it’s her job to guide the little guy through regulations that can leave business owners fuming.

The bakeries got caught in tax-code changes in 2003 that reclassified their products as prepared food, requiring them to charge 7% sales tax instead of 2% food tax. When they kept charging the lower rate, the Department of Revenue came looking for back taxes. The bakeries claim that the department gave them bad information. She explained their options and helped them figure out what to do. They decided to take the issue to the General Assembly. Pending legislation could reverse the change.

McDonald grew up in Greenville, Miss., where she worked in the small businesses that her father owned, including a car dealership. “You always get to work in them,” she says. “You get to — or else.”

She earned bachelor’s and master’s degrees in history from Texas Christian University and took a teaching job at Oklahoma State University. There she was the county campaign manager for David Boren, a Democrat who was running for governor. Boren won that 1974 race, as well as a later one for the U.S. Senate, and she served on his staff in both offices. Those were the first stops in a government career that equips her to help small businesses navigate the bureaucracy.

In 1979, she moved to Washington, D.C., with her husband, who joined the Federal Election Commission. She left government to be associate director of the Gas Research Institute, now the Gas Technology Institute. But in 1990, she was named to the Interstate Commerce Commission. She became its chair in 1993.

After the ICC was abolished in 1995, she began filling her résumé with one public-service job after another. She has been an administrator in the Department of Transportation, the national ombudsman for the Small Business Administration and a member of Maryland’s Public Works Commission.

Along the way, she and her husband became part owners of a house on Figure Eight Island, which led them to decide to settle in North Carolina when he left the FEC. She came first, to the State Ports Authority in 2004 as director of government relations. He joined her in Raleigh this year.

McDonald, 62, started her new job in April. She expects many of the problems she encounters will involve environmental regulations. Most calls will go to Commerce’s Business ServiCenter. Complicated issues, such as the bakeries, will come to her — and she’ll be sympathetic when appropriate. After all, she says, if you buy bread made at the grocery store, you pay 2% tax.