Nearly 110,000 state regulations are crippling North Carolina’s economy, which has grown at a lethargic pace since 2006, an academic researcher told lawmakers Tuesday.
The burden is reason enough to roll back regulations, said James Broughel. He is a research fellow with the Mercatus Center at George Mason University and spoke to the Joint Legislative Administrative Procedure Oversight Committee.
But there are other justifications.
The state administrative codes include excessive occupational licensing regulations that protect people in a variety of professions, Broughel said. They prevent competition, especially from poor people who could rise from poverty if the restrictions were lifted.
North Carolina’s Gross Domestic Product grew at 0.8 percent from 2006-16, Broughel said. The U.S. GDP growth was 1.4 percent over that period. By contrast, the GDP grew at a rate of about 3.5 percent annually the last half of the 20th century. GDP is a way to measure the economy.
Federal regulation alone may slow growth nationally by 1 or 2 percentage points a year, Broughel said. But there’s little information about state regulations and their effects, making it difficult to assess their additional drag on the economy.
At North Carolina’s current growth rate, it would take 87 years for state GDP to double — longer than the life expectancy of a newborn — Broughel said. If the economy were growing at 3 percent, the GDP would double two to three times over a person’s life span.
Regulatory reform could boost anemic economic performance, Broughel said.
The Mercatus Center is counting and categorizing regulations in all 50 states to help assess their impact. A report on North Carolina was issued Tuesday.
Broughel cited British Columbia as a success in cutting regulations. The Canadian province passed a law requiring two regulations to be eliminated for every new regulation adopted. In doing so it reduced its number of rules by 47 percent.
Rep. Elmer Floyd, D-Cumberland, said sometimes state agencies resist regulatory cutbacks. People who make the rules are reluctant to abolish them.
British Columbia encountered the same situation initially, Broughel said. That’s why it’s vital to have an oversight body such as North Carolina’s Rules Review Commission in place to ensure compliance. Capping rules and setting deadlines to meet the caps should be adopted at the outset. Regulators should get incentives and rewards as part of the plan to encourage rule makers to become rule managers.
North Carolina law requires a 10-year sunset of regulations. A good start, Broughel said, but no substitute for requiring regulations to be eliminated. Under periodic review, some regulations may be scrapped, but too often they are simply readopted and left in place.