State auditor says failure to reform regulations is hurting businesses

PLF attorneys regularly represent people who have been stymied by government in their attempts to earn a living.  For example, Adam Sweet and Michael Munie were both prevented from legally operating moving companies until PLF challenged the unconstitutional laws that stood in their way.  It was with these and other entrepreneurial PLF clients in mind that I took an interest in a recent Washington State Auditor report called Regulatory Reform: Communicating Regulatory Information and Streamlining Business Rules.

The report sharply criticizes state agencies for failing to establish a regulatory system that accommodates the needs of private businesses.  It is surprisingly candid:

Doing business in Washington today means sifting through a complex maze of state and local laws and regulations.  At the state level alone, someone wanting to open a small convenience store wtih a gas pump, for example, would have to get regulatory approval from up to a dozen different state agencies, in addition to approvals from local jurisdictions.

To be successful, businesses must be able to find, understand, and comply with the regulations that apply to them.  They spend time and money trying to learn and comply with those regulations.  The challenge is especially difficult for small businesses, usually lacking the resources that enable larger companies to hire attorneys and other specialists to help them comply.  When businesses fail to fully comply with regulations, they face fines and penalties.

The report goes on to conclude that Washington has failed to achieve its goal of providing for streamlined administration of its regulatory system.  And this problem, it seems, is not limited to Washington.  The auditor’s report lists 21 other states that have determined that reforming their regulations could help improve business climate.

Other notable findings include:

• There are 26 state agencies in charge of administering 1,377 different business permits, licenses, and inspections.  These are just the state regulations that affect businesses, and do not include local regulations governing such things as land use.
• Washington has 3 websites designed to provide regulatory information to businesses, but each is incomplete.  Only 16% of business licenses (and only 2 of the 10 most requested licenses) are available online.
• Only about one-third of all business permits are described in the Office of Regulatory Assistance online handbook, and these include only environmental permits.
• Complete regulatory information for 57 of the most requested permits and licenses is not available online.
• Only 23% of permits and licenses provide online information about processing time, despite direction from both the legislature and governor that such information must be made available.
• Zero agencies measured the results of their regulatory streamlining activity to determine whether it had the intended effect.