Research Note: The Texas Example
As previously discussed, economic statements are crucial for quantifying the impact of regulations and ensuring that state agencies thoroughly evaluate all options and understand the downsides before regulating the state’s economy. Furthermore, these reports should be independently reviewed to verify the legitimacy of the agencies’ findings. Texas, unsurprisingly, hits all the positive marks for impact statements.
Three statements are required in Texas for all proposed administrative rules: the fiscal note, cost-benefit analysis, and a “government growth statement.” The fiscal note addresses the impacts on the balance sheets of the state or any local government. The cost-benefit analysis dives deeper, providing a five-year layout of the individual costs along with the benefits that the agency finds. Finally, the government growth statement abridges the fiscal note with a longer-form description of new employees, programs, fees, or adverse economic effects resulting from the rule. This provides a strong starting point for agencies’ rulemaking process. Following the adoption of a rule, agencies must review each rule every four years and choose to readopt or repeal it.
The bulk of Texas’ impact statements are triggered by a rule’s potential effects on other areas. For instance, any rule that may have environmental effects requires a detailed supplementary regulatory analysis. This document outlines the environmental problem being addressed and the necessity of the rule while describing the costs and benefits for all affected parties. Policy alternatives must be articulated, including why they were not adopted. A regulatory flexibility analysis must be submitted if there are adverse impacts on small businesses or rural communities, utilizing performance standards rather than design standards. Finally, an employment statement is created in the scenario that a rule will affect employment in each geographic area over five years.
The governor and the Regulatory Compliance Division of the executive branch independently review each of these statements. This division objectively assesses proposed rules from various state licensing agencies that impact market competition. Independent review should occur outside of the government or, at minimum, the executive office. However, this small issue is not burdensome on the state’s economy, as the state boasts the 8th largest global economy, lower operating costs, and 50 Fortune 500 companies. As the governor’s office says, “The Lone Star State is committed to upholding its position as the Best State for Business—a title it has held now for the 20th consecutive year.”
What could this look like in Nebraska? Currently, Nebraska’s statements require a description of affected entities, necessity and legislative authority, consistency with legislative intent, and fiscal impacts as the core of statements. There are no provisions for periodic review, disproportionately affected entities, or further standardization. As a result, statements lack the necessary depth and thoroughness. Nebraska would benefit from better-structured requirements for the statement, independent review, and, simply put, more required reviews to analyze cost and benefits, detailed policy alternatives, and thorough evaluations of the impacts on all affected parties.
- “Business Climate.” Office of the Texas Governor, gov.texas.gov/business/page/business-climate. Accessed 6 June 2024.
- James Broughel. “A 50-State Review of Regulatory Procedures” Mercatus Working Paper, Mercatus Center at George Mason University, Arlington, VA, June 2019.