Nebraska is cutting red tape, but still has room to improve
Excessive regulations have harmful effects on prosperity and growth. In many cases, the compliance costs of these regulations constitute a hidden tax on businesses and citizens, costing valuable resources that could be contributing to Nebraska’s economic growth.
Regulation is a necessity of our society, and we should not get rid of all regulations. But Nebraska needs to make sure its regulations are not excessive to the point of unnecessarily inhibiting economic growth or putting up barriers to those with an entrepreneurial spirit.
Legally, federal regulations are applied to each state equally – but the unique mix of industries in each state results in a different economic impact. Nebraska’s industry mix makes it particularly hard-hit by federal regulation, and while it’s hard to change these federal regulations, there are state regulations on top of these rules that also impact our local economies.
Over the years, more and more regulations have been added at the state level, which has increased the complexity and cost of doing business and has ultimately hindered Nebraska’s economy.
Historically, state regulations have been hard to study because they were difficult to measure. Thanks to a new project at the Mercatus Center at George Mason University called RegData, which uses a computer-based analysis of state regulatory codes, we can now analyze and compare state-level regulation. The Platte Institute and the Mercatus Center started working on quantifying Nebraska regulatory restrictions a few years ago, and during that time we have seen a noticeable change.
Mercatus studied each state’s regulatory code for the number of restrictions between 2015 and 2019 and again for all states in 2020. I took the respective year’s population and calculated a per capita regulations figure, so it was more applicable to Nebraska. Now we can compare the two snapshots of Nebraska’s regulatory code.
In 2017, Nebraska had the 12th highest number of restrictions measured on a per capita basis. Nebraska had 100,627 restrictions, and calculated against the 2017 population, that equated to 52.5 restrictions per 1,000 people.
After having the framework to review the states’ regulatory codes in place, Mercatus was able to review all the states in 2020 for a single year snapshot. Nebraska stayed the same at 12th, but the good news is that the state reduced its restrictions by 4,672, dropping our total count to 95,955 or 49.6 restrictions per 1,000 people.
When comparing the two data sets, there were 27 states that increased their number of restrictions. Texas saw the largest increase in total restrictions, followed by Oregon, Ohio, Maryland, and Illinois. There were 18 states that reduced their restriction count, including Nebraska. Wyoming decreased its restrictions the most, followed by West Virginia, Idaho, Missouri, and Kentucky.[i]
It is good to know that according to Mercautus research, “four of the six states that saw the largest percentage reduction in regulatory restrictions between the releases of version 1.0 and version 2.0 of State RegData are states that have cited Mercatus research or used State RegData metrics to guide their red-tape-cutting efforts. These states are Idaho, Missouri, Kentucky and Nebraska.”
Even though Nebraska is seeing a positive trend in a short period of time, our state needs a regulatory review process. Regulations should be evaluated based on their effectiveness and impact to the state’s economy. One way to do this is through a REINS Act (Regulations from the Executive in Need of Scrutiny Act), which would give the Legislature authority to disapprove or nullify agency regulations. This type of act would also require a review process to take place before certain regulations could be implemented, normally those that have financial impacts over a certain dollar amount. Wisconsin was the first state to enact a state-level REINS Act in 2017.
To learn more about our proposal for a Nebraska REINS Act, click here. To learn more about Nebraska’s state regulations, click here. If you want to see the most recent legislation to remedy the problem of not having a state review process, click here.
[i] In the first snapshot the regulatory codes of Arkansas, Hawaii, New Jersey, and Vermont were not able to be analyzed due to data limitations. In the 2020 snapshot, Alaska, Arkansas, Connecticut, Hawaii, New Jersey, and Vermont were not able to be analyzed.