The John Locke Foundation’s First in Freedom Index ranks North Carolina No. 36 in the nation and No. 8 in our region in regulatory freedom. Even with regulatory reforms enacted every legislative session since 2011, there is still work to be done to ensure more freedom and less burden from government regulations.
A legislative committee is taking an in-depth look at rules and rulemaking in North Carolina and will make recommendations for further reforms. A state-level REINS Act is worth careful consideration.
As of March 2014, North Carolina had 21,751 rules in the Administrative Code, with 5,551 in health and human services, 3,253 covering occupational licensing boards, and 2,980 in environment and natural resources.
Economists at the Beacon Hill Institute in Boston estimate that North Carolina’s regulations cost our economy a minimum of $3.1 billion in 2015 and as much as $25.5 billion. That’s larger than our General Fund budget this year.
Think about it this way: Every rule has a cost associated with it. Multiply that cost by 21,751, and multiply that again by every person, business, or industry that has to comply with that rule.
You see the impact rules have on North Carolina’s economy. It’s massive.
When we’re required to get a safety and emissions inspection on our car every year, it costs us $30. When an entrepreneur is required to install a sprinkler system in her facility, there is an additional cost of up to $7 per square foot to start that business.
Think about the business owner who has to spend hours reading through red tape, comparing federal law with state law and local ordinances to ensure he is complying. That’s time he could have invested into growing his business.
There is a cost to the taxpayer as government grows bigger and bigger, hiring more staff to police and enforce more and more rules. A bigger government costs more as the layers of bureaucracy grow and those charged with enforcing the rules settle into jobs in ever-larger departments and agencies. And when more resources go to enforcing rules, there is less money to pay our good teachers and law enforcement officers, and to fund other core functions of state government.
Often these costs are the result of outdated, unnecessary, duplicative, overly burdensome rules. Low-income families and struggling small businesses are hit the hardest as the rules grow.
The biggest cost we pay is our loss of freedom. Whether it’s what kind of bushes you can plant along the creek bed in your back yard; or time-sucking compliance with duplicative federal, state, and local rules; or restrictions on where you can park your food truck, every rule has a cost. Often that cost is our freedom to enjoy the fruits of our labor and to pursue our dreams.
I’m not suggesting that we should have no rules. We need rules for order, consistency, and fairness, to protect public health, safety, and the environment. But what has happened over the years is that the authority has gone from the legislature to unelected government bureaucrats with no oversight and no accountability. As far back as 1978, the N.C. Supreme Court warned that the delegation of legislative rulemaking power should be “closely monitored.”
Under our state Constitution, the General Assembly has the authority and the duty to enact laws. Legislators study, debate, discuss, and take public comment. Bills go through numerous committees, votes, amendments, scrutiny, and analysis before they become law.
From 2003 to 2010, 19 percent of the bills introduced in the General Assembly became law. During a comparable period — 2004 to 2009 — 99.9 percent of the rules written by unelected government bureaucrats went into effect.
Our General Assembly has begun to address the regulatory burden, beginning with the Regulatory Reform Act of 2011 and with a Regulatory Reform Act every year since.
We now have a regular review of rules and a cost-benefit analysis. We disallow state environmental laws from being more stringent than federal laws and offer guiding principles for new rules. Great progress has been made since 2011 in reforming burdens of overregulation in North Carolina. Moving forward, there are additional restraints that can be used.
At the Locke Foundation, we propose a tool to return rulemaking authority to the General Assembly and increase accountability and transparency. Under a REINS Act, major rules would require a vote from the General Assembly and the governor’s signature. Without that approval, the proposed rule would die. Major rules are those with significant economic impact.
It’s an idea that’s passed the U.S. House of Representatives three times since 2011. Americans for Prosperity, FreedomWorks, and the American Legislative Exchange Council endorse a national REINS Act.
With so much gridlock at the federal level, it’s more and more likely that states will be the places where good policy happens. Policymakers and thought leaders in Mississippi, Florida, Ohio, and Utah join North Carolina in looking at adopting a state-level REINS Act.
North Carolina has become a national model in tax reform, in education reform, in the restraint of government growth. North Carolina can become a model in rules and regulation reform as well. The adoption of a state-level REINS Act would increase accountability and transparency, restrain the burden of overregulation, and further enhance the freedoms of North Carolinians.
Becki Gray (@beckigray) is Vice President for Outreach at the John Locke Foundation.