Regulation
Rollback
Del.
Chris Saxman is promoting a flexibility-in-
regulation
law that should curtail the spread of useless,
job-killing regulations.
Burdensome
regulations cost consumers money in the form of
higher prices, fewer choices, or less quality. A
recent research study, The Impact of Regulatory
Costs on Small Business, estimates that
businesses with less than 20 employees spend
nearly $7,000 each year, per employee, just to
comply with federal regulations and mandates.
That’s 60 percent more than the $4,463 estimated
for firms with more than 500 employees. This is
before the impact of state and local regulations
which add thousands on top of that figure.
That
extra sending means higher prices for consumers
and lower wages for workers.
In addition, it takes capital out of
entrepreneurs’ pockets, preventing them from
additional investment and from creating new jobs.
The
good news is that some states are begining to address
this regulatory “tax” on small business by
giving small business owners a bigger voice in
shaping proposed regulations, and giving them the
tools to fight unfair or ridiculous regulations
that don’t make sense.
The
bad news is that Virginia
is lagging behind the rest of the country —
especially in our region. In the latest Small
Business Survival Index published by the Small
Business and Entrepreneurship Council, Virginia
dropped from 14th to 15th this year. While 15th is
nothing to hang our heads about, we should strive
to make the Commonwealth more business friendly
— attracting more jobs, more investment, and
making our economy even stronger.
Just
a few weeks ago Rhode Island
became the latest state to become more small
business friendly when Gov. Donald Carcieri signed
a new regulatory flexibility law. It requires
state agencies to consider how regulations would
affect small businesses before issuing new rules.
Six
other states have enacted similar laws this past
year, including two in the region — Kentucky and
South Carolina — legislation is pending in 11
other states, but not here in Virginia. In
addition, West Virginia
adopted a measure by executive order. The
Commonwealth should follow suit — sign an
executive order or pass legislation to make the Virginia
a more business friendly environment. The time is
ripe considering that our neighbors are taking the
lead.
Our
leaders don’t have to reinvent the wheel. The
U.S. Small Business Administration Office of
Advocacy has created model legislation for the
taking. The legislation provides four benefits to
small businesses.
Del.
Chris Saxman, R-Staunton, who is planning to
introduce the legislation in January, says,
"As a small business man, I understand all
too well the dramatic impact that regulations can
have on a business. I think it is long overdue in Virginia
that we have more reasonable and flexible laws
that can help businesses thrive in a 21st century
economy."
First,
each agency that intends to adopt or amend a
regulation must give 30-day written advance notice
to the governor’s office and an equivalent of an
Economic Development group. If either the governor’s office or the
economic development office determines that the
proposal may have a significant adverse impact on
small business, the agency must then prepare a
detailed analysis and consider using alternatives
to minimize the impact.
Second,
at the minimum, the 30-day period allows
any interested party to submit data, to view, or
to make
arguments for or against proposed changes
to the regulatory structure, thus ensuring a dialogue
will take place between the small business
community and the regulatory body. In addition, it gives small businesses a
chance to have a potential political advocate in
the governor’s office and government agencies.
Third,
the legislation gives small businesses a right to
appeal particularly burdensome regulations through
normal administrative channels. But if they fail,
they may now appeal in state court.
In essence, small businesses now have the
right to judicial review of agency-level
decisions.
Fourth,
state agencies will conduct housecleaning on the
regulations on the books.
Agencies will have to periodically review
what’s already on the books, looking for
outdated and cumbersome regulations. A review of
this kind will give agencies an opportunity to
eliminate regulations that may be outdated.
According
to the US Small Business Administration, adoption
of a similar rule at the federal level has saved
small businesses $31 billion in foregone
regulatory compliance costs over the last three
fiscal years (‘01-’03).
Tom
Sullivan, SBA’s chief counsel for advocacy
argues that these savings results in “more jobs
and growth.” Reduced regulatory burden frees up
money in a small business’s budget to invest
more. In addition, Sullivan argues that the new
legislation “guarantees small business a seat at
the table” and will result in “better
decisions” when regulatory decisions are made.
Beyond
the benefits to small businesses, there is a
significant benefit to the state as well.
Providing small business input before rules are
adopted saves the state from expensive
reevaluation and analysis of regulations. In
addition, the removal of outdated and poorly
written regulations should result in fewer
enforcement expenses.
The
Commonwealth should waste no time in implementing
this change. Doing so will foster small business
investment, job growth, and generally a more
competitive business environment.
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October 18, 2004
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