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Governor Initiates Regulatory Overhaul; Which Rules Would You Change?

Posted by John Regan on Mar 31, 2015 2:09:00 PM

Associated Industries of Massachusetts (AIM) will support the Baker Administration’s newly announced regulatory reform initiative by collecting information from Bay State employers about regulations that needlessly impede economic growth.

Baker2014AIM President Richard C. Lord said the association has established a Web page that allows employers to report regulations that are inefficient, ineffective or outdated. The association will forward all of the information it receives to state officials as they conducts their yearlong regulatory review.

“The 4,500 employer members of Associated Industries of Massachusetts (AIM) unequivocally support regulatory reform. One of the key objectives of AIM’s long-term economic plan, the Blueprint for the Next Century, is for Massachusetts to develop a world-class state regulatory system that ensures the welfare of society in a manner that meets the highest standards for efficiency and predictability,” Lord said 

“AIM has collected a rich library of evidence over the years from employers about regulations that work and those that do not. We expect to add to that body of information and share it with the administration and the Legislature as we work together to make the vision of effective regulation a reality.”

Governor Charles D. Baker signed an executive order today initiating a comprehensive review process for all regulations enforced by the Executive branch and leaving in place the regulatory moratorium announced by the administration earlier this year. The order requires state agencies to ensure that existing regulations are clear and concise and that any newly proposed regulations are measured for their potential impact on businesses of all sizes.

The administration will encourage public input on proposed regulations. Business and competitiveness impact statements will be made available on the commonwealth’s Web site.

Baker identified regulatory reform as an economic priority during a speech to the AIM Executive Forum last November.

“This will be an intensive process that ultimately makes Massachusetts a more efficient and competitive place to live and work, while driving economic growth,” the governor said in a statement today.

Added Secretary of Administration and Finance Kristen Lepoere: “We will ensure that all regulations administered by the Executive Department benefit the Commonwealth without undue burdens or costs and serve a legitimate purpose in making Massachusetts a safe, healthy, and effective place to do business.”

AIM’s Blueprint for the Next Century offers several suggestions for improving the state regulatory environment:

  • The governor should appoint an independent ombudsperson to review comments, suggestions and complaints from employers about ineffective state regulations and/or the manner in which those regulations are enforced. The ombudsperson would have the authority to determine which regulations and/or enforcement issues represent real impediments to growth and recommend changes to the Legislature or the executive branch.
  • Encourage regulators and employers to adopt “smart partnerships” to ensure that government-business interactions solve problems instead of propping up bureaucracies.
  • Engage willing employers who are global leaders in productivity and process improvement to streamline the operation of state government agencies. General Electric, an AIM member, provided just such a service for the New York State Highway Department at the request of Governor Andrew Cuomo. GE Capital used its expertise in lean process to help the Highway Department reduce the processing time for curb-cut requests from 70 days to three days.

Please contact Brad MacDougall, Vice President of Government Affairs at AIM, bmacdougall@aimnet.org, with questions or comments.

Topics: Business Regulation, Regulation, Charlie Baker

A Step Toward Better Regulation

Posted by Rick Lord on Jan 20, 2015 7:25:26 AM

One of the key recommendations of AIM’s Blueprint for the Next Century is for Massachusetts to establish a world-class state regulatory system that ensures the welfare of society in a manner that meets the highest standards for efficiency, predictability, transparency and responsiveness.

WolfMeadowFarmThe Baker administration took an important first step toward that objective last week when it imposed a temporary freeze on new state regulations until March 31. The ban underscores the governor’s determination to embark upon the kind of long-term regulatory reform he discussed at the November 14 AIM Executive Forum.

Administration and Finance Secretary Kristen Lepore was particularly encouraging in a memo to Cabinet secretaries. She said the administration's goal is to "modernize and simplify" state regulations "in a manner that enables rather than encumbers" the state's citizens.

"A regulation should be straightforward, effective, and no more burdensome than necessary to achieve its purpose," Lepore wrote. "No regulation should be adopted (or remain in place) unless it is easy to understand and meets a specific, discreet need."

Amen.

AIM is develping a plan to provide Massachusetts with a world-class regulatory system. Our suggestions inlude:

  • The governor should appoint an independent ombudsperson to review comments, suggestions and complaints from employers about ineffective state regulations and/or the manner in which those regulations are enforced. The ombudsperson would have the authority to determine which regulations and/or enforcement issues represent real impediments to growth and recommend changes to the Legislature or the executive branch.
  • Encourage regulators and employers to adopt “smart partnerships” to ensure that government-business interactions solve problems instead of propping up bureaucracies.
  • Engage willing employers who are global leaders in productivity and process improvement to streamline the operation of state government agencies. General Electric, an AIM member, provided just such a service for the New York State Highway Department at the request of Governor Andrew Cuomo. GE Capital used its expertise in lean process to help the Highway Department reduce the processing time for curb-cut requests from 70 days to three days.

We look forward to the debate and welcome the initial action by the new administration.

Topics: Regulation, Charlie Baker

AIM Proposes Improvements to Tax Rules

Posted by Brad MacDougall on Dec 19, 2014 10:59:43 AM

Editor’s Note: The following article is written by Michael Jacobs and Robert Weyman, both attorneys with AIM-member law firm Reed Smith LLP. Jacobs and Weyman are members of Reed Smith’s State Tax Group and focus their practices on corporate state tax controversy and planning matters.

Finance.pen.smallNew rules that change the way numerous multi-state businesses will determine their Massachusetts corporate taxes go into effect for tax returns filed in 2015.

The rules require that many sales, for example sales of services, be sourced to a taxpayer’s “market.” Under the old rules, these sales were sourced to the location where the taxpayer incurred its costs in making the sale.  Combined with a “throwout” rule, this new tax regime can dramatically change the formula a multi-state business uses to determine the portion of its income Massachusetts can subject to tax.

Over the past year, the Massachusetts Department of Revenue (DOR) has been drafting revised regulations that interpret the new rules and guide taxpayers attempting to implement them. DOR issued a first draft in March and then a revised draft in October.  The draft regulations now include more than seventy pages of complex rules that taxpayers will have to apply in short order. 

At each stage of the drafting process AIM has solicited feedback from its Tax Committee and the AIM membership at-large. The association pushed DOR to consider and incorporate AIM member concerns into the revised regulations.  AIM has also presented member concerns to the Department of Revenue in written comments.

AIM’s most recent written comments, submitted on December 4, range from broad tax policy suggestions to technical critiques of specific regulatory provisions.  Three overarching themes run throughout the comments.  

Fairness

AIM has fought for fair application of the new taxing rules, challenging the DOR to craft rules that put taxpayers and the department on equal footing.  For example, a proposed provision would prevent some taxpayers from filing amended returns that adjust how they determine their “market,” while permitting the Department to audit the taxpayer and adjust its return.  AIM has strongly objected to the inequity of this provision.   

Certainty

AIM is rightly concerned that regulations that provide multiple potential sourcing options governed by subjective tiered rules will result in audit disputes and litigation.  AIM urged the commonwealth to create a tax system that results in certainty for taxpayers, so that taxpayers are not hit with surprise tax assessments years down the road. 

Minimizing Regulatory Burdens

AIM objected to the voluminous and complex nature of the regulations, and the regulatory compliance burden they will create.  AIM requested that the DOR incorporate clear and easily applied “safe harbors” into the regulations.  For example, AIM has questioned the necessity of certain rules that could require taxpayers to conduct granular analysis of where its services are delivered to specific customers.  AIM rightly points out that such provisions would result in a tax regime that is more complex and difficult to administer than almost any other state in the country.

The DOR is expected to issue its final regulations by the end of the year.  While the Department has already implemented some of AIM’s comments in its December revised draft, it is hoped that state officials take the opportunity to review AIM’s detailed critiques and to implement suggested changes that would help to ensure that the final regulations are fair, give taxpayers certainty, and minimize regulatory burdens to the extent possible.

For a copy of AIM’s comments, contact Brad MacDougall, Vice President of Government Affairs, bmacdougall@aimnet.org.

 

Topics: Regulation, Taxes

Blueprint for the Next Century | Regulation

Posted by Christopher Geehern on Nov 19, 2014 9:16:00 AM

(Editor's note - AIM last week released the Blueprint for the Next Century, a long-term plan for economic growth and prosperity in Massachusetts. The AIM blog will this week publish one summary each day of the four recommendations contained in the Blueprint. We invite your responses in the Comments section.)

Establish a world-class state regulatory system that ensures the health and welfare of society in a manner that meets the highest standards for efficiency, predictability, transparency and responsiveness.

RegulationWhere We Stand

Massachusetts employers acknowledge the need for effective and well-managed regulation that ensures the health and welfare of society without weakening the financial underpinnings of the job market. But the employer community believes that Massachusetts regulations and the regulators who enforce them often stray from the primary objective of protecting society and into a mindset of “punishing” businesses.

Where We Can Improve

  1. The governor should appoint an independent ombudsperson to review comments, suggestions and complaints from employers about ineffective state regulations and/or the manner in which those regulations are enforced. The ombudsperson would have the authority to determine which regulations and/or enforcement issues represent real impediments to growth and recommend changes to the Legislature or the executive branch.

    Associated Industries of Massachusetts, as the statewide business association, will establish a phone/internet hotline, or perhaps a mobile app, through which employers might report regulations they believe are not efficiently achieving their objectives. AIM would pass these communications to the ombudsperson.

  2. Encourage regulators and employers to adopt “smart partnerships” to ensure that government-business interactions solve problems instead of propping up bureaucracies.

    State Senator Daniel Wolf from the Cape and Islands, founder of Cape Air in Hyannis, recalls an example of creative problem solving that took place many years before he entered public service.  The Federal Aviation Administration required (and requires) Cape Air to scrupulously wash all aircraft. The airline did so, but then faced fines from the Massachusetts Department of Environmental Protection because there was some runoff into drains on the airport tarmac. After good-faith negotiations, the DEP and Cape Air reached an agreement: Cape Air paid for a state-of-the-art clean wash bay for Barnstable Municipal Airport, and DEP significantly reduced the fine. This was a win for the company and a win for the citizens of the commonwealth. And, it represents a great example of a “smarter partnership.”

    The governor should engage willing employers who are global leaders in productivity and process improvement to streamline the operation of state government agencies. General Electric, an AIM member, provided just such a service for the New York State Highway Department at the request of Governor Andrew Cuomo. GE Capital used its expertise in lean process to help the Highway Department reduce the processing time for curb-cut requests from 70 days to three days.

    Empower front-line regulators with the authority to approve creative solutions such as the one developed with Cape Air.

  3. Initiate a comprehensive review to identify regulations that are outdated, redundant, ineffective, inefficient or unnecessary.

  4. Eliminate current state regulations that exceed federal standards.

  5. Adopt an immediate moratorium on any state law or regulation that exceeds or duplicates a federal law or regulation.

  6. Enact broad regulatory reform at the Massachusetts Department of Revenue:

    Ensure that taxpayer returns remain confidentially held by the DOR.

    Ban DOR from lobbying the Legislature and other elected officials.

    Reform the DOR’s audit practices to ensure timely resolution of disputes and increase the use the mediation.

    Reform the Appellate Tax Board to ensure fair, equitable and timely resolution of tax disputes.

    Eliminate the practice and use of contingent auditors.

    Improve the DOR’s electronic filing system, which is one of the most challenging and complicated in the country.

  7. The state should work with cities and towns to establish a set of efficiency and fairness standards for local issues such as inspections, fees and permitting.

    Associated Industries of Massachusetts, perhaps in conjunction with the Massachusetts Municipal Association, will develop an annual rating of the business climate in cities and towns and recognize the top 10 municipalities for business.

    The commonwealth and its municipalities should move toward regionalization of functions such as inspections and permitting to improve efficiency.

 

 

Topics: Regulation, Taxes, Blueprint for the Next Century

Where are the Workers for the New Economy?

Posted by Christopher Geehern on Nov 14, 2014 8:59:30 AM

(Second of two parts)

Eric Fogg, Bill Bither and Jacob Lauzier carry all the promise and challenge of the Massachusetts economy when they arrive for work each day in a nondescript office in the college town of Northampton.

BlueprintNextCentury-1The entrepreneurs are hard at work on a venture called MachineMetrics, a cloud software solution that improves the productivity of manufacturing facilities by collecting, analyzing and visualizing data from machines, parts and people. The two have already signed up high-profile regional manufacturers like Savage Arms in Westfield and Valley Steel Stamp in Greenfield as customers.

It’s an almost mystical handshake from the future of the economy to the present, from one generation to another, acknowledging the seminal role that both must play to ensure prosperity for the people of Massachusetts in the next century.

“We need to persuade software entrepreneurs looking to create the next app or something in the software industry that there is a tremendous amount of opportunity in manufacturing. We need young entrepreneurs to connect with manufacturing companies and work on new ideas,” said Fogg, who spent 16 years in precision machining and owned his own shop.

MachineMetrics is the kind of company that may ultimately determine the ability of Massachusetts to build upon an economy that  in many ways remains a paradox—an international center of technology, innovation, medical research, financial services and higher learning near Greater Boston but a more traditional, amorphous economy outside of Route 128. Fogg, Bither and innovators like them hold the unique promise of joining the “eds and meds” economy of the 617 area code with existing industries struggling to create jobs for residents in the rest of the state.

It is a promise that will be played out against a vibrant and unforgiving global economy in which investment, resources, jobs, people and capital flow at blinding speed to the most competitive environments. States, regions and nations no longer have the luxury of taking their job bases for granted – failure to nurture the business climate not only impedes the growth of existing companies, but also leads to a silent and corrosive flow of job expansions to other locations that provide employers with the best opportunities for success.

The challenges that MachineMetrics faces are emblematic of those facing the commonwealth as a whole:

  • Will the advanced manufacturing companies to which they want to sell their idea survive in the relentlessly high-cost, high-regulation environment of Massachusetts?
  • Will machinemetrics find the skilled, educated and motivated people it needs to grow and to develop new iterations of the company’s software?
  • Will young companies located in western Massachusetts and other areas outside the Cambridge/Boston innovation beltway develop the critical mass needed to extend opportunity throughout the state?
  • Will the machinemetrics platform make manufacturers so efficient that they will be able to increase business without creating new jobs?
  • Will government regulators encourage the growth of companies like machinemetrics, or will they set up bureaucratic impediments like the ones that recently convinced a neighboring software company in Amherst to move to Texas?
  • Will the government research money that built Massachusetts into a world class center of high education, medical science, biotechnology and defense technology continue to flow or slow to a trickle?

Massachusetts employers share a remarkable consensus about the answers to these fundamental questions. It is a consensus that forms the foundation of the Blueprint for the Next Century, a long-term plan for economic growth and prosperity in the commonwealth. Associated Industries of Massachusetts, the statewide employer association, is publishing the Blueprint on the occasion of its 100th anniversary in 2015.

The employers of the commonwealth respectfully propose the following initiatives to ensure the future of the Massachusetts economy:

  1. Develop the best system in the world for educating and training workers with the skills needed to allow Massachusetts companies to succeed in a rapidly changing global economy.
  2. Support business formation and expansion by creating a uniformly competitive economic structure across all industries, geographic regions and populations, rather than picking winners and losers.
  3. Establish a world-class state regulatory system that ensures the health and welfare of society in a manner that meets the highest standards of efficiency, predictability, transparency and responsiveness.
  4. Moderate the immense long-term burden that health care and energy costs place on business growth.

The Blueprint for the Next Century charts a course that will provide every citizen with the opportunity to build a life, prosper, support a family and share in the economic fortunes of Massachusetts. It is a call to action that embraces the dictum of Theodore Roosevelt, who said “We should not forget that it will be just as important to our descendants to be prosperous in their time as it is to us to be prosperous in our time.”

AIM stands for jobs, economic opportunity, fiscal predictability, business formation, innovation, education and a government that acknowledges that the private sector has the unique ability and responsibility to create the common wealth for the people of Massachusetts.

Topics: Regulation, Health Care Costs, Energy, Workforce Shortage, Blueprint for the Next Century

Bureaucratic Self-Preservation at TURA

Posted by Bob Rio on Sep 29, 2014 9:55:00 AM

The Massachusetts Toxics Use Reduction Act (TURA) has in many ways lived up to its name – fees established under the law have prompted scores of companies to reduce or eliminate their use of chemicals, cutting overall payments into the program. Unfortunately, the people who run TURA have taken that as a cue to jack up fees to a level that may drive many of the remaining companies out of state.

InnovationSmallThe TUR Administrative Council voted 4-2 a week ago to begin the regulatory process to raise TURA fees nearly 50 percent for many companies, with total overall fees collected increasing 42 percent, (some of the smaller companies get less of an increase).

The two members to vote against the proposal were Timothee Rodrique, Chief Engineer, Division of Fire Safety and Tim Wilkerson, Regulatory Ombudsman, Director of Economic Policy Development. The proposal will now proceed through the normal process for regulation changes, including public comment.

Enacted in 1989 and amended most recently in 2006, TURA requires Massachusetts companies that use large quantities of listed chemicals to evaluate and plan for pollution prevention opportunities, implement them if practical, and annually measure and report the results.

AIM opposes the proposal to increase fees:

  • The universe of filers under the TURA program is only 468 companies. Forcing those companies to pay more to fund programs from which they derive no benefit is anti-business and acts more as a tax than a fee.  
  • Mmany companies left on the list either manufacture or distribute listed chemicals, or use these chemicals in a way for which there is no substitute. These companies thus pay a tax for merely operating – and employing workers – here in Massachusetts. No other state levies such a fee.    

  • The fee is even applicable if a company uses these chemicals for public safety or pollution control.

AIM was also concerned with the lack of analysis related to the impact these fees would have on users and the lack of notification to the impacted parties.  

AIM has at times supported regulatory fee increases, but only when those hikes are connected to a benefit the payers are receiving. Here, the program is continuing to collect fees only because many of the remaining companies are caught in an endless cycle of reporting. The overall fee income is declining because a shrinking number of companies use these chemicals, which under normal conditions would be considered a success. Here it just means more fee increases for the remaining companies to maintain the program

As the regulatory process continues we urge those who will be impact to make comments and call their elected officials to make the point that the fee increases should be reasonable and connected to a service provided.  

Topics: Regulation, Environment

Reducing Regulatory Red Tape

Posted by Christopher Geehern on Jul 24, 2014 2:03:58 PM

Massachusetts employers frequently cite burdensome regulation as a barrier to growth, so it comes as welcome news that the commonwealth has amended or eliminated 255 regulations since 2011.

Patrick.RegulatoryReformGovernor Deval Patrick said this morning that the administration has reviewed all 1,791 executive-branch regulations in existence on January 1, 2012 and weeded out those that were duplicative or out of date.

“Our collective growth and prosperity depends on the growth and prosperity of our small businesses,” the governor said during an event at the Boston Lobster Company.

“These common-sense changes are positive steps forward in improving the business climate by striking a better balance between protecting consumers and communities and enabling innovators to start and grow companies here in the commonwealth.”

The most visible changes for employers have come through the repeal of certain Massachusetts Health Connector regulations, including elimination of the Fair Share Contribution requirement, elimination of the Employer Health Insurance Responsibility Disclosure form and elimination of the requirement that employers offer section 125 plans to pay for coverage through their group health plan or through the Health Connector on a pre-tax basis or be subjected to a surcharge.

Other streamlined rules highlighted by the governor include:

  • The Massachusetts Department of Transportation standardized permitting and police escort fees for oversized loads on Interstate 93 and the Massachusetts Turnpike.
  • The Department of Environmental Protection repealed a duplicative approval process for certain Title V septic systems. The amendments streamline state oversight by ending the requirement that local approving authorities consult with DEP before determining whether facilities asserted to be in separate ownership are in fact a single facility.
  • The Division of Professional Licensure Board of Professional Engineers and Land Surveyors adopted model national professional standards of practice. Regulatory changes reflect technological advances in the licensed professions, such as the use of digitized seals and signatures. 
  • The Department of Public Health adopted a model National Registry of Emergency Medical Technicians (EMTs) examination and certification; reduced licensure fees; allowed online licensure filing; and made changes to EMT scope of practice and training standards.

AIM member employers provided scores of suggestions for regulations that needed to be reviewed during the three-year process.

Brad MacDougall, Vice President of Government Affairs at AIM, said the Patrick Administration review represents a positive first step in what must be a continual process by government and employers to ensure that regulations remain efficient and effective.

“We commend the administration for injecting common sense into the Massachusetts regulatory structure, especially in the area of health insurance,” MacDougall said.

“We look forward to continuing the review process. The ability of government to ensure the public interest without needlessly burdening employers is decisive factor in the future of the Massachusetts economy.”

The governor said the regulatory review is the first comprehensive effort of its kind in Massachusetts history, and one of the first completed reviews in the nation.

AIM members with suggestions about additional regulations that need to be reformed may contact MacDougall at bmacdougall@aimnet.org.


 

Topics: Regulation, Deval Patrick

Massachusetts Revises Burdensome On-Site Hoisting Rules

Posted by Robert Rio on Nov 22, 2013 2:32:00 PM

The Massachusetts Department of Public Safety has released final regulations that will exempt some manufacturing and warehouse companies from burdensome rules for licensing people who operate forklifts, overhead cranes and other hoisting equipment on company property.

HoistingState law previously required individual licenses for every operator of even small pieces of hoisting equipment commonly used in manufacturing facilities, retail outlets, warehouses and warehouse- type stores. AIM worked with state regulators two years ago to pass a law - signed by Governor Deval Patrick on October 14, 2010 – to allow the Department of Public Safety to streamline the regulations.

The proposed new regulations would expand the current exemption from the licensing and permitting requirements for public utilities to include companies operating certain hoisting equipment solely on company property, provided certain conditions are met. One key condition is that a company must maintain an employee training program approved by the commonwealth.

Individuals or organizations seeking to offer continuing education courses for individuals to be licensed to operate hoisting machinery must submit an application to the Department of Public Safety. All courses must be monitored by a Massachusetts hoisting license holder and must offer a curriculum that, at a minimum, complies with detailed requirements for each class of hoisting machinery, as outlined in the proposed regulation.

The state regulations are in addition to any federal Occupational Safety and Health Administration requirements that cover hoisting equipment. The rules also impact temporary permits that may be issued by a short-term rental entity for the operation of compact hoisting machinery.

If a company is not able to take advantage of the new exemption, then traditional licensing requirements will apply.

Employers need to pay attention to these new rules and carefully understand their applicability. Because state officials have rarely enforced the hoisting rules over the years, many companies will find themselves confronting the regulations for the first time. These companies may have no idea what the hoisting regulations are all about or why they may apply to their business.

You may comment below or email me at rrio@aimnet.org with questions.

Topics: Regulation, Hoisting, Safety

The Numbers Behind a Non-Competitive Economy

Posted by Christopher Geehern on Jun 13, 2013 9:01:00 AM

American employers have long been convinced that inefficient regulation and bureaucratic governmental institutions make it harder to run a business in the United States than elsewhere.  

Small businessTurns out, they’re right. Harvard historian Niall Ferguson argues in a book to be published today, and in an adaptation in the Wall Street Journal this week, that economic growth in the United States is being undermined by creaky regulation, staggeringly complex legislation and a court system choked by frivolous litigation.

Ferguson argues more broadly in The Great Degeneration:How Institutions Decay and Economies Die, that the central institutions of Western democracy - representative government, the free market, the rule of law and civil society, are all in decline.

“If poor countries can get rich by improving their institutions, is it not possible that rich countries can get poor by allowing their institutions to degenerate?” Ferguson asks in the Journal.

He says the numbers leave little doubt that American entrepreneurs face an uphill battle:

  • The World Bank defines “red tape” by measuring the total number of days it takes entrepreneurs to start a business, obtain a construction permit, register a property, pay taxes, get an export or import license and enforce a contract.  The time period to accomplish those tasks in the U.S. has increased 18 percent from 368 to 433 days during the past seven years, an increase that places the nation in the bottom 10 worldwide along with Zimbabwe, Burundi and Yemen.
  • The U.S. score in the World Economic Forum Global Competitiveness Index has declined by six percent in the past decade, while China has improved its score by 12 percent. Business executives responding to the Forum’s most recent survey cited “inefficient government bureaucracy,” taxes and tax regulation as the most problematic factors for doing business in the United States.
  • The U.S. ranking for its legal system and property rights has dropped from ninth in the world in 2000 (9.23 out of a possible 10) to 33rd in 2010 (7.12 of a possible 10), according to the Fraser Institute’s Economic Freedom Index.
  • A separate evaluation of the U.S. legal system by the World Justice Project ranks the nation 17th out of 97 countries for the extent to which the law limits the power of government, 19th for regulatory enforcement and 22nd for access to civil justice. Ferguson points out that the ranking place the U.S. near the bottom of former British colonies, behind New Zealand, Australia, Canada and Hong Kong.

The news is even more sobering for employers doing business in highly regulated, high-cost states like Massachusetts.  Ferguson notes in the Journal that the pace of institutional degeneration is not uniform. He maintains that the nation’s four primary growth corridors – the Great Plains, the Gulf Coast, the Intermountain West and the Southeast – “are growing not just because they have natural resources but also because state governments in those regions are significantly more friendly to business.”

Ferguson is not the only researcher to underscore the growing friability of key American economic institutions. Michael Porter of Harvard Business School last year asked alumni to indentify the areas where the United States was falling behind other countries. The most common responses – the effectiveness of the political system, the K-12 education system and the complexity of the tax code.

Associated Industries of Massachusetts believes that the cost and sheer complexity of starting a business here in the commonwealth often acts as an unseen brake on the innovation, discovery and entrepreneurship that are the Bay State’s most visible economic strengths. That complexity is about to increase as Massachusetts prepares to implement the 906-page Affordable Care Act and its thousands of pages of accompanying regulations.

It already takes 433 days to get a business on its feet in the United States. Business people can’t wait another day.

Topics: Regulation, Issues, Economy

It's Put Up or Shut Up for Employers on Regulatory Reform

Posted by Brad MacDougall on Mar 21, 2012 10:38:00 AM

It’s put up or shut up time for Massachusetts employers on the issue of regulatory reform.

Regulatory ReformAn advisory committee that includes AIM is inviting Massachusetts employers to identify outdated or burdensome regulations that should be included in the Patrick administration’s sweeping reform of more than 1,000 state business rules.

The committee of a dozen employers and business organizations held its first meeting recently at the AIM offices in Boston. Among the organizers of the group is AIM Director Michael Hogan, President and Chief Executive Officer of A.D. Makepeace Company in Wareham, who last year chaired the regulatory reform working group as a member of the Governor’s Economic Development Planning Council.

“Cutting regulatory red tape is one of the best ways to accelerate job growth in Massachusetts,” said Richard C. Lord, President and CEO of AIM and a member of the advisory committee.

“Employers have a unique opportunity to bring to the attention of state government those regulations that are inefficient, unnecessary and ineffective. But nothing will happen if employers do not speak up.”

Lord is encouraging employers to identify for the advisory committee by April 10 any state regulation that inhibits business growth without producing measurable benefit for the citizens of the commonwealth. Employers should email a description of the regulation, along with their contact information, to my attention at AIM, bmacdougall@aimnet.org

The Patrick administration says it has already reviewed more than 200 old regulations across nearly 60 state agencies. Of those already reviewed, 41 will be rescinded and 107 will be improved, including 25 changes to adopt a national model or standard. These recommended changes cover a wide range of topics and include streamlining licensing requirements, simplifying standards for business practices, and eliminating duplicative reporting requirements.

The Executive Office of Housing & Economic Development has also appointed April Anderson Lamoureux, Assistant Secretary for Economic Development, to act as a regulatory “ombudsman” between the administration and business leaders on the topic of regulation.

Inefficient regulation places a huge burden in the economy. A study by researchers Nicole Crain and Mark Crain found that U.S. employers spent $1.75 trillion – or $10,585 in per employee – to comply with federal regulations alone in 2008. The compliance tab amounted to 14 percent of U.S. national income. Add the federal tax burden of 21 percent and one out of every three dollars earned in the United States goes to comply with federal laws and regulations.

The financial load falls disproportionately on small companies with fewer than 20 employees. That means regulatory expenses choke the very entrepreneurial ventures we count on to drive the innovation-based Massachusetts economy.

Topics: Regulation, Issues

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