Nebraska’s regulatory environment has room to improve

Last week, the Mercatus Center of George Mason University released its 2024 edition of “Snapshots of State Regulations.” As with most rating systems, this allows states to compare themselves to other states and examine particular strengths and weaknesses in their systems. These strengths and weaknesses explain good and bad rankings and provide focus areas for continued work or improvement.

The ranking indicates regulation restrictions in the state. Studies from Mercatus have shown that slower economic growth is associated with more regulatory restrictions on individuals and businesses. That slower growth is “correlated with increased poverty rates, lost jobs, and higher inflation, among other effects.” It does not consider other items that may affect economic growth in states, like tax policy or climate, geography, and tourism. In the ranking system, a lower number indicates more regulations. In this instance, being #1 is not a most-desired placement, at least not for those who believe that smaller government is to be desired and red tape to be avoided as much as possible.

Nebraska’s ranking found us in 39th place—not quite in the “best 10,” but in the running with about 76,201 regulations that were part of the Nebraska Administrative Code. The good news is that—except in the health services, taxes, and public finance areas—Nebraska regulations were lower in most public policy areas than the average number of regulations in most states. Likewise, the regulatory environment for most industries is comparatively friendly in Nebraska compared to other states.

In 2017, a similar study by Mercatus showed 100,627 regulations in the Nebraska Administrative Code–the decrease is another cause for celebration, attributable in large part to former Governor Ricketts’ Executive Order No. 17-04 in 2017, which slowed down rule-making, required some cost-benefit analyses in regulation, and required that any regulation deemed to be “more restrictive than required under state or federal law or creates an undue burden on Nebraskans, shall be revised or repealed.” The cutting of regulations by nearly a quarter in the last 6-7 years is encouraging.

Comparing Nebraska to neighboring states, however, Wyoming, Kansas, and South Dakota all have fewer regulations than we do, so we’re clearly not in the best shape among states in  the region–something which can and should inspire us to seek new ways of improving.

It’s important to remember that no matter how good (or bad) a state’s ranking may be, that position is not static. It is neither a cause for resting on the laurels of high rankings, nor despondency because of low ranking. Other states are also looking at their rankings and trying to decide how to improve them to remain competitive or increase their competitiveness. Without any change, rankings could drop in succeeding years–or rise if exceptional actions are taken compared to what other states are doing. Those policymakers who believe that “government should be run like a business” would be well-advised to keep their eyes on rankings of all types, and work to improve their comparative advantage to other states.

Mercatus includes a couple of suggestions for Nebraska policymakers as they consider how best to remain competitive and to minimize regulation to that which is absolutely necessary. First, creating a regulatory budget. One way to do that is place a cap on the number of regulations the state can have at one time,, targeting a number lower than the current number of regulations. That could be done by setting goals for cutting, requiring cost-benefit analyses be put in place like Executive Order No. 17-04 did, establishing a “one in, X out rule” for regulations, or even monetizing the costs of regulations.

Another suggestion is the regulatory sunset. This would create some sort of automatic removal of regulations after a specific period of time, unless explicitly renewed by the legislature. It also requires a regular review of the value of rules. Governor Ricketts’ executive order included an executive sunset review of sorts, but the legislature should consider enacting one in law–something which would create a required process, regardless of who is sitting in the Governor’s office.

Earlier this summer, we published a series of Research Notes related to regulatory reform, and we are actively engaged in trying to find ways to improve Nebraska’s regulatory environment to become the BEST in the country.  Stay tuned!