Two New State Studies Say Regulatory Relief is a Priority

January 10, 2014

Reducing the state’s regulatory burden has long been a top priority for the business community.  Businesses large and small have, for decades, complained our state’s layers of complex regulations are confusing, disjointed, contradictory and often impossible to fully comply with.  The call has repeatedly been to reform our state’s regulatory system in order to make Washington a more competitive state to do business.

In recent years elected officials have started to listen.  Numerous agency studies have detailed the morass of regulations employers must know, understand and comply with in order to legally do business in our state, and those studies have recommended common sense strategies to provide regulatory relief.

The newest of those studies come from the state Department of Commerce (DOC) and the State Auditor.

Last month the state Department of Commerce (DOC) released a draft of a study on how Washington can help startup businesses succeed.  The study was in response to a budget proviso in last year’s SB 5034, which directed the state agency to “develop a comprehensive start-up Washington strategy to facilitate the growth of start-ups and enhance the state’s competitiveness in recruiting and retaining businesses that start up in Washington.”

DOC’s study, “Startup Washington—Strategy to Facilitate the Growth of Startup Businesses,” explores the role startup businesses play in our state’s economy and why so many startups fail, and offers a “Startup Washington Agenda” for the state to encourage startups, as well as improve the sustainability of new businesses.

The draft study notes “businesses of all sizes are frustrated by the time and cost of regulatory compliance.”  The Startup Washington Agenda recommends creating a “Governor’s Red Tape Index” to measure and target how regulations can be streamlined and simplified.  The Agenda also includes a recommendation long sought by the business community—to create a single portal through which businesses can transact with all state agencies and entities to obtain licenses, apply for permits and make payments.

On the heels of the DOC study, last week the State Auditor released the second in a series of five performance audits on the state’s regulatory processes.  The goal of the series is to determine how the state can promote more efficient and effective regulation at a lower cost to both business and government.  The most recent audit examined permitting timelines, specifically how quickly agencies process business permit applications and how well they communicate with applicants before and during the application process.

Like the first audit in the series, which studied whether the state’s 26 regulatory agencies effectively provide information to business and how well they have responded to directives to streamline regulations, the second audit found significant room for improvement.

“Regulatory Reform: Improving Permit Timelines” concludes the 14 state agencies that issue our state’s 225 business permits could improve permitting predictability for businesses by providing processing times and that these regulatory agencies “could shorten the time it takes to submit, review and make decisions on business permit applications through simple, low-cost improvements.”

Noting that “businesses spend time and money waiting for regulatory decisions,” the State Auditor found that despite being “repeatedly” instructed by lawmakers and executives at the state and federal level to provide businesses with information about permit processing times, to process permits in a timely manner and to measure their results, state agencies:

  • Provide businesses with information about how long a permit decision will take, either online or on the application form, for just 40% of all permits, with three agencies providing little or no permit timeline information.
  • Formally track processing times for just 62% of the states’ business permits, and tracking is inconsistent (three agencies track few or none of their permits).
  • Have formal decision-time targets for only 57% of all business permits.

The most interesting part of the audit report was one of the reasons agency officials gave for not tracking permit decision times:  “They believe business permitting is not a priority function of the agency.”

It seems these agency officials believe the agency exists to regulate businesses, not help them comply with those regulations by providing them with the permits needed to legally do business in the state.  No doubt these officials believe prosecuting and punishing businesses that do not have the proper permits is a priority function of the agency.

This explanation emphasizes a mind-set that plagues many state regulators.  Instead of being guided by the principle that government works for the taxpayer and that helping the businesses that create jobs should be the priority, the agency culture instead puts greater priority on dropping the hammer on those who might be out of compliance.  Of course, the irony is it is the businesses of this state that stimulate the economy and generate the revenue that funds these state agencies. 

While some agency officials may not understand this concept, a growing number of policy makers do.  The fact that leaders from both sides of the aisle are calling for regulatory relief for businesses is encouraging.  But along with regulatory reform, a significant revamping of state agency culture will clearly be needed.