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Cutting Red Tape Will Accelerate Job Growth in Massachusetts

Posted by Rick Lord on Mar 5, 2012 1:53:00 PM

Cutting regulatory red tape is one of most efficient ways to promote job growth.

RegulationAssociated Industries of Massachusetts has for years fought to reduce unnecessary and outdated regulations that discourage business and employment expansion. We are therefore encouraged by Governor Deval Patrick’s announcement today that the commonwealth will undertake a sweeping reform of more than 1,000 state regulations and, separately, require business impact statements for new regulations.

“We are focusing our regulations on what’s necessary, and eliminating what’s not,” Governor Patrick said. “We will continue cutting unnecessary red tape, and by doing so, we will demonstrate once again why Massachusetts is the best state in the country to do business.”

The regulatory reform will be the first in Massachusetts since 1996. The administration hopes to find at least 250 rules that can be streamlined or rescinded, reducing burdens on small businesses and improving government efficiencies.  State agencies have been directed to consider the appropriateness of adopting national models or standards to align the state’s practices with those in place elsewhere in the country.

The governor’s initiative comes a year after the Legislature backed a proposal developed by AIM and sponsored by Senators Michael Rodrigues and Michael Moore to require state agencies to report publicly on the potential impact of any new regulation on Massachusetts business. The two moves together provide Massachusetts with an unprecedented opportunity to address rules that may sound reasonable on their own but impose a huge economic and social burden on the commonwealth.

How heavy is that burden? The economic cost of regulation is hard to quantify on a state level, but 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.

Eliminating inefficient and outdated regulations means that existing companies will expand, abandoned buildings will take on new life, and entrepreneurs will feel the confidence they need to start businesses. We commend the Patrick administration for its business-like approach to the regulatory challenge.

The 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. 

Meanwhile, AIM director and Executive Committee Member Michael Hogan, President of AD Makepeace Company, is working with the administration to convene a group of employers to advise state officials on regulatory issues.

Do you have a suggestion for an inefficient regulation that should be included in the regulatory review? Please provide your ideas in the comment section below, or contact Brad MacDougall, Vice President of Government Affairs (bmacdougall@aimnet.org).

Topics: Regulation, Issues, Deval Patrick

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