by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Tax reform has attracted more attention, but North Carolina’s recent regulatory reform initiatives might prove even more important for the state’s long-term future, as Jon Sanders explains for Washington Examiner readers.
For states trying to strengthen their economies, there are strong reasons to believe that state regulatory burdens matter at least as much as state tax burdens. Unintentionally running afoul of a complicated environmental rule or failing to get the required permit to site a new location can make or break a growing business.
According to a recent John Locke Foundation analysis of academic research on state economic growth, studies of state regulatory burdens were more likely to find negative effects on the economy than studies of state taxes were. So even as North Carolina’s new elected officials have pursued spending restraint, tax reform, and other goals, they have made regulatory reform an ongoing priority.
In 2011, the Republican-led legislature passed tort reform, medical malpractice reform, and workers’ compensation reform. They capped it off with the Regulatory Reform Act of 2011, overriding Democratic then-Gov. Bev Perdue’s veto to rein in overreach by the state’s environmental agencies.
Among other provisions, the bill required new rules to meet tests of legal authority and cost-effectiveness, while blocking environmental agencies from adopting rules more stringent than federal standards without clear legislative approval.
The following year, lawmakers produced the Regulatory Reform Act of 2012, which required certification that proposed new rules adhere to the new state rulemaking principles before they could be published.
This year, the North Carolina legislature enacted a third Regulatory Reform Act. Its most important provision requires review of all existing state regulations on a 10-year cycle. If a rule is no longer legally authorized, necessary, or capable of delivering benefits greater than its costs, it will automatically sunset.
This was another example of applying sound empirical research to the legislative process.