Ohio is the fourth most-regulated state in the nation, but it has the potential to be a leader when it comes to regulatory reform, a Mercatus senior research fellow says.
James Broughel, an economist with The Mercatus Center at George Mason University, says other states have ongoing efforts to reduce regulatory requirements, but only Ohio and Virginia have actual legislation that measures and tracks the amount of regulation in the state over time.
The Mercatus Center’s mission is to bridge the gap between academic research and public policy problems. Its team of researchers has been working for several years to find a way to effectively measure how much regulations there is on the federal level and which industries it impacts. Broughel got involved in the QuantGov project several years ago.
“I thought it was a cool project and wanted to expand it to the states,” he said.
The result is State-RegData, a database that measure how many words are in each state’s regulatory code and how many times the code uses regulatory terms.
According to Mercatus, Ohio’s 2018 Ohio Revised Code has 15.2 million words. “It would take an individual about 847 hours—or more than 21 weeks—to read the entire OAC. That’s assuming the reader spends 40 hours per week reading and reads at a rate of 300 words per minute,” they say.
They then count regulatory restrictions in the code: the number of times the words and phrases shall, must, may not, prohibited, and required appear. Those words can signify “legal constraints and obligations.”
Ohio’s code has 246,852 restrictions. Only California, New York and Illinois have more regulations than Ohio.
Broughel says that many of the regulations are justified, and necessary to protect the public health. “But it’s the cumulative effect that undermines those goals,” he explains.
“It’s a state’s natural tendency to pass more laws every year than they repeal – to add more regulations to books than they remove,” he adds. “As a general matter, (states) don’t have good procedures for reviewing regulations and removing them when they become outdated.”
And regulations can have a detrimental effect on a state’s economy, especially “when you have 200,000 in action all at once.” Broughel says regulations can discourage entrepreneurs from starting and inhibit companies from growing. “That’s the danger that the cumulative growth (of regulations) will have on the economy and then on wage growth,” he says.
Broughel believes transparency in terms of how much regulation is in a state is important. He says it “makes sense for every state to have some sort of metric for measuring how much regulation they have, if for no other reason than transparency.”
“In general,” he adds, “most governments are not very good at providing transparency of how much regulation they have or on reviewing it. But we’re beginning to see that turn around and that’s exciting.”
He points specifically to House Bill 166, Ohio’s 2020-21 budget bill which went into effect on July 18.
That act requires nearly all state agencies to review their existing rules and create a base inventory of regulatory restrictions by December 31, 2019. They must count the same five terms Mercatus used in order to determine a regulatory restriction. For each restriction, they must provide:
- A description of the regulatory restriction;
- The rule in which the restriction appears;
- The statute under which the restriction was adopted;
- Whether state or federal law expressly and specifically requires the agency to adopt the regulatory restriction or the agency adopted it under the agency’s general authority; and
- Whether removing the restriction would require a change to state or federal law.
Inventories must be posted on the agency’s website and sent to the Joint Committee on Agency Rule Review (JCARR). JCARR will review each inventory and send it to the House and Senate.
Broughel says the best part of the new law is that any new regulations must be balanced by the removal of old ones.
The bill says that through June 30, 2023, no agency can adopt any new restriction unless it simultaneously removes two, or more, existing restrictions. Also, no agency can merge two existing restrictions into one in order to accomplish this.
As hopeful as Broughel is for Ohio’s effort at regulatory reform, he does have concerns. He believes there should be more permanence to reform efforts, and that one entity in the state should be responsible to make sure it’s on track and accomplishes the goal. “It would be easy to change the terms in order to eliminate the tracked terms and just replace them with words not tracked,” he cautions.
But the budget bill isn’t the only legislation to address regulatory reform, he notes. Senate Bill 1 was passed by the Senate and is now pending in the House State and Local Government Committee.
While the budget bill contained some of the provisions of S.B. 1, there are several elements it didn’t include, which Broughel believes are important. It:
- Requires each state agency to reduce the regulatory restrictions contained in its rules by 30 percent by 2022.
- Prohibits an agency from adopting new regulatory restrictions that would increase the percentage of restrictions in the agency’s rules.
- Requires an agency that does not achieve a reduction in regulatory restrictions according to the required schedule to eliminate two restrictions before enacting a new rule containing a restriction.
- Effective January 1, 2023, limits the total number of regulatory restrictions that may be in effect in Ohio.
Broughel says this bill is worth monitoring and could pass on its own.
“Ohio might not be done with regulatory reform,” he said.
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Maggie Leigh Thurber is a writer for The Ohio Star. Email tips to [email protected].
