Jan 2, 2020

Idaho is the Least Regulated State and a Model for the Rest of the Country

Idaho finds a way to cut regulations without controversy
James Broughel Senior Research Fellow , Krista Mitchell Staff Writer

Last month, Idaho Governor Brad Little announced that the state cut more than 1,800 pages of regulations in 2019, bringing its total regulatory count down to just 41,000 restrictions. If this new count is accurate, it would make Idaho the least regulated state in the nation, according to recent research from the Mercatus Center.

That’s great news for Idaho. But what does this development mean for the future of regulatory policy more generally?

First, the Idaho experience demonstrates that state governments can significantly reduce regulations without much fanfare or controversy. Idaho claims to have cut or simplified an astounding 75 percent of its rules. This regulatory reform is being done transparently with input from the public in the form of written comments and public meetings. Early next year, state legislators will also have a say when they decide whether or not to give final approval to Governor Little’s new streamlined administrative code.

Some of the cuts may have been uncontroversial because they were considered low-hanging fruit. For example, Idaho had rules on the books related to a TV game show that was never produced. These types of rules probably aren’t burdening the public, but they do unnecessarily clutter the code, which over time adds complexity that ultimately can dissuade would-be entrepreneurs from starting businesses or expanding them. 

Cutting low-hanging fruit makes sense, but future reformers in Idaho and elsewhere should prioritize extending such reviews beyond merely eliminating obviously outdated and unnecessary regulations. Reforms should also include reviewing rules that may sound good in theory but may not achieve their objectives in practice. 

Lawmakers can better distinguish beneficial regulations from ineffective and harmful ones by relying more on economic analysis in the review process. This is not a new idea: the federal government has applied a form of cost-benefit analysis to new regulations for decades. And while that process is far from perfect, it enjoys bipartisan support and is better than conducting no analysis. 

In general, the states lag far behind the federal government in using economic analysis to evaluate their regulations. This is a drawback because it means regulations are unlikely to be evidence-based. But it also presents an opportunity because states can experiment in areas where the federal government has come up short. For instance, the federal government rarely bothers to analyze the stock of existing regulations, focusing instead on new rules. This is a major problem, but it’s one area where the states can lead the way. 

Furthermore, regulatory analyses produced by federal agencies tend to be highly political, often wielded to promote rules rather than to assess them. But this need not be the case, as more objective analytical institutions exist—even within the federal government—whose experience can be instructive. For instance, the legislative branch has a number of research arms, such as the Congressional Research Service (CRS) or the Government Accountability Office (GAO), that produce high-quality, informed research, mostly free of politics. These entities tend to be more objective than executive branch regulatory agencies, perhaps because congressional analytical offices have to serve both major political parties, whereas regulatory agencies serve the party of whatever president is in power.

As legislators around the country consider creating their own institutions to analyze regulations, they should house these responsibilities in existing trusted bodies within the state legislature (similar to CRS and GAO), such as an audit office or a budget scoring authority. In cases where this is impractical or where executive branch regulatory agencies are already doing the work, it makes sense to create an oversight role for the courts and to give judges the power to vacate rules not backed by rigorous economic analysis. Just the threat of judicial review can be an incentive to rigorously review regulations because regulators are highly sensitive to legal challenges.

Idaho’s path toward becoming the least regulated state offers a road map for other states. The state’s recent experience shows that it’s not inevitable that a state’s regulatory code grows ever larger and more complicated year after year. Indeed, major cuts in regulations are possible and need not be controversial. The question is whether states and the federal government will go beyond cutting superficial regulations to systematically and analytically review their entire regulatory infrastructure. The Idaho experience demonstrates the first steps in this process. Now it’s time for the states and federal government to take reforms to the next level. 



 

 

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