Idaho’s New “Budget” for Red Tape

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Hitting the ground running, Governor Little recently signed two executive orders taking aim at unnecessary regulations affecting Idahoans. His actions are part of a growing trend, as states and even the federal government create innovative “budgets” for red tape. Other states should take notice of Idaho’s leadership.

One executive order states that prior to proposing new regulations, a state agency must identify two older regulations to simplify or get rid of (or explain why this isn’t possible). This process targets the more than 8,200 pages in the Idaho Administrative Code, which contains a whopping 72,000 restrictions, according to the Little administration. This is actually less red tape than most states have, but it’s still more regulation than any person or small business can reasonably keep track of.

In effect, the new order creates a budget for Idaho rule makers. We all know that the government has a fiscal budget. Legislators appropriate funds to agencies, placing a limit on how much taxpayer money each can spend. But until now, there’ve been few constraints on how much of the people’s money regulators can “spend” off-budget.

Regulatory spending takes the form of lost time, money, and accounting and legal fees—to say nothing of piles of paperwork—for people and businesses as they comply with rules. Without a budget, regulators have virtual carte blanche authority to impose nearly limitless costs on the public.

Idaho can now start to meaningfully manage its regulations. Appropriately, the Idaho Division of Financial Management—which tracks state revenues and expenditures—is overseeing the reform. It will review agency rule and repeal activity, report regularly to the governor, and hold agencies accountable for the burdens they impose. With this added transparency, legislators and the governor can have more say in how regulations affect their constituents, just as they have a say in how taxpayer money gets spent.

Other states, like Virginia, are moving in the same direction. Last year, Virginia introduced a red tape reduction pilot program at two of its agencies. By mid-2020, all state departments will have to tally and report how many requirements they impose.

In Washington, the Trump administration is experimenting with a regulatory budget, too. For the first time, federal agencies are starting to receive annual allowances that limit how much additional cost can be imposed on Americans each year.

Importantly, a regulatory budget doesn’t stop an agency from addressing pressing public concerns. Many regulations serve a vital public need, and those rules can continue under the current programs. The difference is that now agencies will have to think more critically about tradeoffs each time they regulate.

Take the state occupational licenses that workers sometimes need before they can enter a profession. The second of Gov. Little’s executive orders establishes procedures for reviewing whether these are all necessary. Sure, it makes sense for physicians to be scrutinized before seeing patients. But too often, licenses affect professions like makeup artists or travel guides, costing workers time and money without providing much or any protection to the public.

Worse, the state boards that set licensing standards tend to be run by industry insiders who’ve learned that—by shackling entrants into their profession with expensive fees and burdensome training requirements—they can keep out competitors and boost their own profits. Gov. Little is right to put these practices under a microscope.

Idaho is one of the two fastest-growing states by population. People go where they find opportunity, and opportunities follow sound public policy. Idaho’s light-touch regulatory approach helps explain why people are voting with their feet and moving to the Gem state.

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James Broughel is a senior research fellow with the Mercatus Center at George Mason University in Arlington, Va., and the author of the recent study “A Snapshot of Idaho Regulation in 2018.”

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