••• Tax & Spending •••

Steps to vaporize Kansas’s regulatory burden

regulatory burden

The regulatory burden on people and businesses accumulates quickly. With 70,969 restrictions containing 3.2 million words, the 2019 Kansas Administrative Regulations would take the average person 180 hours to read. In Kansas, an estimated 29,409 jobs have been lost due to occupational licensing restrictions, which in total has led to $197.5 million lost from the state economy annually. Cutting through red tape creates opportunities for people and businesses to focus elsewhere other than the government burden.

Why reduce the regulatory burden?

All regulations have a cost of compliance. An aspiring hairdresser has to pay for a cosmetology license and put in the necessary hours as well. Businesses spend money to install or adjust their capital to be in accordance. Small businesses spend on average $83,000 a year complying with state and federal regulations, not to mention the dozens of hours studying the law or consulting with lawyers to understand them. That $83,000 could be going elsewhere, like hiring new employees, giving raises, expand the shop or goods provided, or more. Any one regulation may be small or simple but it’s the cumulative effect that is staggering. Throw one boulder in a river and it isn’t that big of a deal. Throw enough of them in there and you have a dam, or a flood somewhere else.

The point is simple: controlling the scope and number of regulations as much as possible gives everyone from workers to entrepreneurs more room to spend what’s right for them. States around the country have pursued a variety of different tasks to accomplish.

Out with the old, in with the new – with a catch

Sometimes states do a full review and get rid of outdated regulations. In 2017, the state of Missouri gathered thousands of public comments and ended up getting rid of one out of every five regulations on their books. In Idaho in 2019, every single regulation – that is, all 8,200 pages – were sunset. They expired, and would have to be reauthorized by the legislature. This forces the constant review of regulations and prevents the build-up of outdated or opaque rules.

A simple reform is the trade-off: for every new regulation, something needs to happen to the old. In Oklahoma, for every new regulation an agency proposes, two need to be revoked. Some sort of “regulatory cap” has been proposed previously at the federal level: every new regulation needs to replace an existing one.

Looking at the number of regulations is a helpful simplification of regulatory burden, but all regulations aren’t equal. There exist millions of regulations governing all manners of issues big and small. For instance, the federal HIPAA privacy rule that says doctors can’t disclose patient information has just 34 unique regulations that fundamentally change the way that healthcare works. Of course, health privacy is incredibly important but does it 34 specific regulations to achieve this goal? To really eliminate burdensome regulations is to target outcomes: what regulations have the most negative effect on people and businesses?

In 2022, Virginia took a new approach and created an Office of Regulatory Management whose goal is to reduce the number of regulatory requirements. In the case that a requirement can be eliminated, the Office has agencies calculate if there can be savings in administering the requirement; if the agency makes it work, then the Office pays them the amount of money saved to be used however they please.

The Office didn’t emerge from thin air  – it came out of Governor Glenn Youngkin’s goal of reducing the regulatory burden by 25%. There needs to be leadership and cohesive goal for regulatory reform to be successful in the long-term.

Kansas could use its own Office of Regulatory Management – or some other organization dedicated to weeding out bad regulations. Indianapolis’s Regulatory Study Commission (RSC) is a model example. The commission established five core guiding principles, including the ideas “the cost of regulation should be no greater than the benefit for the community” and conditions restricting regulations to community and agency norms. The commission split the regulations into those affecting businesses versus consumers, then performed economic analysis to determine the costs and benefits before adjusting the policies.

Lessening the burden of regulations is just one way that Kansas can and needs to sharpen its economic footing to stay competitive with nearby states.