by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor, John Locke Foundation
Regulations’ costs on an economy, though not direct and obvious like taxes’, are no less real. For the national economy, the 2019 edition of the “Ten Thousand Commandments” report by Clyde Wayne Crews for the American Enterprise Institute calculates the cost of regulation at $1.9 trillion, “greater than the corporate and personal income taxes combined.”
It’s the same for state regulations. For North Carolina, state regulations have been estimated to cost the private sector up to $25.5 billion in a single year. Such a tremendous toll on private enterprise, especially in terms of deadweight loss, is why it is vital to ensure that state regulations are (1) carefully made, and also (2)periodically checkedto see if they’re working, still needed, outdated, or more trouble than they’re worth.
Sunset with periodic review is one of the most sensible, sound, and proven effective policies a state can have to keep regulations under control. North Carolina has a good process of sunset provisions with periodic review (and it wouldn’t take much to make it better).
Idaho, however, is about to test what happens when the entire regulatory code sunsets and lawmakers have to bring back only the ones they need. James Broughel for Mercatus explains:
The situation came about due to the somewhat unconventional nature of Idaho’s regulatory process. Each year, the state’s entire existing body of regulations expires unless reauthorized for an additional year by the legislature. In most years, reauthorization happens smoothly, but not this year.
Instead, the legislature wrapped up an acrimonious session in April without passing a rule-reauthorization bill. As a result, come July 1, some 8,200 pages of regulations containing 736 chapters of state rules will expire. Any rules the governor opts to keep will have to be implemented as emergency regulations, and the legislature will consider them anew when it returns next January. …
The new scenario creates multiple touch points when rules could end up on the cutting room floor. First, when regulations expire on July 1, many will not be refiled. Second, the public will have the opportunity to comment on regulations that are resubmitted. In some cases, public hearings are likely to take place, presenting another opportunity to reshape, and cut, some regulations. Finally, when the legislature returns next year, it will need to pass a reauthorization bill for those regulations Governor Little’s administration wants kept. Even more red tape can be trimmed then.
Of course, many regulations serve a justified purpose. The challenge for the Little administration will be to hone in on those rules that add costs disproportionate to any benefits produced, whilst preserving and perhaps even strengthening any rules that are working well.