Five Ways That Governors Can Cut Red Tape

Overview

A crucial element of democracy is accountability. Lawmakers are held accountable for their actions by the voters who determine whether they should hold office, which encourages legislators to act in the best interest of those they represent. However, the model of accountability falls apart with bureaucratic agencies. Unelected bureaucrats promulgate rules that have the force and effect of law.¹ While some regulations may be necessary, others are burdensome, confusing, and duplicative.² Consumers ultimately pay the price for excessive regulation in the form of higher prices, less innovation, and fewer competitors.³ 

Across the country, state regulatory codes are cluttered with outdated regulations that cause headaches for businesses and individuals or are simply unnecessary.⁴ For example, before Idaho took action to deregulate, there was an entire chapter of the administrative code that had to do with a snail that does not reside in Idaho.⁵ Car dealers in Missouri were required to have a landline phone.⁶ And Ohio had more than 240 rules on the books regarding lottery games that were no longer played.⁷

Regulations at the state level can be difficult to measure and keep track of. One way of measuring the volume of regulation is to simply count the words in a state’s administrative code. For example, California’s regulatory code is more than 22 million words long.⁸ Across the board, the average state administrative code is 9.4 million words long.⁹ Even if a person made reading the regulatory code their full-time job, it would still take 13 weeks just to read through the average state code, much less understand it.¹⁰ Reading through California’s regulatory code would take the same person more than 32 weeks.¹¹

Another way to measure a state’s regulatory burden is to tally the number of restrictive words (like shall, must, may not, etc.) in the text.¹² Texas has more than 273,000 regulatory restrictions in place.¹³ On the other end of the spectrum, Idaho has been a leader in deregulation and has fewer than 37,000 regulatory restrictions.¹⁴ 

Excessive regulations at all levels of government imperil freedom and stifle economic growth. States with higher levels of regulation have greater income inequality than those with lower regulatory burdens.¹⁵ Additionally, regulations hamper entrepreneurship and prevent new businesses from entering the market.¹⁶ Start-ups or small family businesses often lack the resources needed to comply with pages and pages of regulations or to fight unfair enforcement.¹⁷ This hurts aspiring small businesses owners and consumers alike by hindering competition and stunting economic growth.¹⁸

If left on autopilot, bureaucracy will only continue to grow. Governors need to take proactive steps to cut red tape and roll back unnecessary regulations.

The top five ways that governors can reduce excessive regulations 

1. Implement zero-based regulation

Governors should issue an executive order to establish zero-based regulation. Zero-based regulation cuts red tape by forcing state agencies to place expiration dates on regulations and requiring state agencies to start the rulemaking process from scratch if they want to keep a particular rule in place.¹⁹ The idea is that the regulatory landscape should start from an assumption of liberty, rather than an assumption of restriction, and this process ensures that only those regulations that are necessary will be maintained. 

In 2020, Governor Brad Little signed an executive order implementing zero-based regulation in Idaho, which required that all agencies repeal and review regulations on a staggered schedule.²⁰ If agencies wish to renew a rule beyond the scheduled expiration date, they are required to promulgate a new rule, which involves a retrospective review of the costs and benefits of the rule and public comment.²¹ A similar executive order was signed in Iowa by Governor Kim Reynolds in 2023.²² 

2. Adopt a rule-for-rule policy

Governors should ensure that for each new rule created, one or more is eliminated from the books. This strategy keeps regulations in check, improves transparency, and forces a review of existing regulations.²³  

In Oklahoma, Governor Kevin Stitt issued an executive order that set a goal of reducing regulations by 25 percent, and requiring that for every new rule, two were cut from the code until the target reduction was met.²⁴ Arkansas Governor Sarah Huckabee Sanders instituted a similar policy through executive order, requiring that two rules be submitted for repeal for every new rule.²⁵ Idaho included a one-for-one policy as part of its deregulatory efforts, meaning that for every new rule, one existing rule is eliminated.²⁶

3. Sunset defunct boards and commissions

Governors should review existing boards and commissions that were created by the executive branch and ensure that only those that are necessary remain in place. 

Many states have hundreds of boards and commissions that are intended to provide input to policymakers. However, if these commissions are no longer serving their purpose, lawmakers should act to eliminate them. Louisiana has 478 boards and commissions, 14 of which are fully inactive and 38 of which have not recorded activity in four years.²⁷ 

In Arizona, the governor issued an executive order in 2020 that eliminated 18 boards and commissions that had already served their purpose or could be incorporated into an existing agency effort.²⁸ Alaska Governor Mike Dunleavy signed 12 executive orders in 2024 that eliminate and consolidate boards and commissions to improve government efficiency.²⁹ 

Reviewing the necessity of these boards and commissions and cutting those not serving their purpose is a simple way that governors can eliminate pointless bureaucracy.

4. Require the governor’s pre-approval before agencies propose a rule  

Governors should issue an executive order to require that agencies submit drafts of proposed rules and receive the governor’s approval before agencies publish a notice for the proposed rule. Pre-approval creates accountability in the process by ensuring that the governor—the elected official directly accountable to the people—has a clear role in rulemaking.³⁰ It also allows governors to ensure that their administration’s goals are being prioritized.³¹ 

In Arkansas, Governor Sarah Huckabee Sanders signed an executive order that required proposed rules to be submitted to the governor for pre-approval to ensure that local businesses did not face overly burdensome red tape.³² In Florida, an executive office for regulatory review that reports directly to the governor ensures that proposed rules are aligned with the administration’s priorities.³³ Agencies under the governor’s policy direction must submit the notice of proposed rulemaking and obtain approval before the rulemaking process can continue.³⁴

5.  Publish current guidance online  

Unlike an official rule, a guidance document doesn’t generally require procedural steps for public notice or comment before it’s issued by an agency.³⁵ Guidance may compel businesses to act in a certain way, and sometimes agencies use guidance to bypass the notice-and-comment process in order to expedite policymaking. Locating and understanding guidance from agencies is difficult.³⁶ The lack of transparency makes it easy for agencies to threaten enforcement actions based on guidance that the public was never aware of.³⁷ To improve transparency, governors should issue an executive order requiring agencies to post current guidance on a publicly available website. 

In 2020, Governor Little of Idaho signed an executive order requiring agencies to organize and post current guidance on the agency’s website.³⁸ Additionally, the order required the published guidance to state that it was merely the agency’s interpretation of a given statute, as opposed to carrying the force of law.³⁹  

Transparency is the bedrock of accountability. Publishing guidance helps people understand where it came from and to whom it applies.

The Bottom Line: Governors should take action to protect economic growth and freedom by reining in regulation.

Business owners should not have to wade through mountains of red tape and restrictions when trying to innovate or expand. Compliance with excessive regulations can take months and is expensive. States should prioritize freedom, innovation, and economic growth by protecting businesses and individuals from excessive regulations. Governors can take the first steps to deregulation by issuing executive orders to reduce the size of the bureaucracy, cut down on red tape, and bring transparency and accountability to the regulatory process.

REFERENCES

1. Jonathan Ingram et al., “Congress must rein in President Biden’s regulatory spending spree to tame inflation,” Foundation for Government Accountability (2022), https://thefga.org/research/congress-must-rein-spending-to-tame-inflation.
2. Matthew Nolan, “National regulatory reform progress rankings report 2023,” The Cicero Institute (2023), https://ciceroinstitute.org/research/national-regulatory-reform-progress-rankings-report-2023/.
3. Ibid.
4. James Broughel, “Cutting red tape in the states: A menu of options,” The Mercatus Center (2022), https://www.mercatus.org/research/policy-briefs/cutting-red-tape-states-menu-options.
5. Editorial Board, “Idaho quits worrying about snails,” The Wall Street Journal (2019), https://www.wsj.com/articles/idaho-quits-worrying-about-snails-11561763217.
6. Justin D. Smith, “Regulatory reform at the state level: A guide to cutting red tape,” University of Missouri School of Law (2019), https://scholarship.law.missouri.edu/betr/vol3/iss2/8/.
7. Governor Mike DeWine, “Governor DeWine, Lt. Governor Husted announce plan to cut one-third of Ohio Administrative Code,” Office of the Governor (2023), https://governor.ohio.gov/media/news-and-media/governor-dewine-lt-governor-husted-announce-plan-to-cut-one-third-of-ohio-administrative-code.
8. QuantGov, “State RegData,” The Mercatus Center (2023), https://www.quantgov.org/us-states-regdata.
9. James Broughel, “Cutting red tape in the states: A menu of options,” The Mercatus Center (2022), https://www.mercatus.org/research/policy-briefs/cutting-red-tape-states-menu-options.
10. Ibid.
11. Author’s calculations.
12. James Broughel, “Cutting red tape in the states: A menu of options,” The Mercatus Center (2022), https://www.mercatus.org/research/policy-briefs/cutting-red-tape-states-menu-options.
13. QuantGov, “State RegData,” The Mercatus Center (2023), https://www.quantgov.org/us-states-regdata.
14. Ibid.
15. James Broughel, “Cutting red tape in the states: A menu of options,” The Mercatus Center (2022), https://www.mercatus.org/research/policy-briefs/cutting-red-tape-states-menu-options.
16. Chris Edwards, “Entrepreneurs and regulations: Removing state and local barriers to new businesses,” CATO Institute (2021), https://www.cato.org/policy-analysis/entrepreneurs-regulations-removing-state-local-barriers-new-businesses#legal-obstacles.
17. Ibid.
18. Ibid.
19. Editorial Board, “Idaho quits worrying about snails,” The Wall Street Journal (2019), https://www.wsj.com/articles/idaho-quits-worrying-about-snails-11561763217.
20. Idaho Executive Order 2020-01 (2020), https://gov.idaho.gov/wp-content/uploads/2020/01/eo-2020-01.pdf.
21. Ibid.
22. Iowa Executive Order 10 (2023), https://iowadot.gov/pol_leg_services/adminrules/EO10.pdf.
23. Oklahoma Executive Order 2020-03 (2020), https://oklahoma.gov/content/dam/ok/en/governor/documents/1909.pdf.
24. Ibid.
25. Arkansas Executive Order 15-02 (2023), https://governor.arkansas.gov/executive_orders/executive-order-to-reduce-government-rules-and-regulations.
26. Idaho Executive Order 2020-01 (2020), https://gov.idaho.gov/wp-content/uploads/2020/01/eo-2020-01.pdf.
27. Louisiana Legislative Auditor, “Boards, commissions, and like entities,” Louisiana Legislative Auditor (2022), https://app.lla.state.la.us/PublicReports.nsf/0/7A91EF11D27B198E862588D30052ABDB/$FILE/00028300.pdf.
28. Arizona Executive Order 2020-01 (2020), https://azgovernor.gov/sites/default/files/eo_2020-01_1_website.pdf.
29. James Brooks, “Gov. Mike Dunleavy proposes biggest use of executive power in decades, drawing some skepticism,” Anchorage Daily News (2024), https://www.adn.com/alaska-news/2024/01/30/some-skepticism-as-gov-mike-dunleavy-proposes-biggest-use-of-executive-power-in-decades/.
30. Haley Holik, “How legislative and executive oversight helps Florida cut and control red tape,” Foundation for Government Accountability (2023), https://thefga.org/research/legislative-executive-oversight-helps-florida-cut-control-red-tape/.
31. Ibid.
32. Arkansas Executive Order 23-02 (2023), https://governor.arkansas.gov/executive_orders/executive-order-to-reduce-government-rules-and-regulations/.
33. Haley Holik, “How legislative and executive oversight helps Florida cut and control red tape,” Foundation for Government Accountability (2023), https://thefga.org/research/legislative-executive-oversight-helps-florida-cut-control-red-tape/.
34. Ibid.
35. Haley Holik, “How USDA sidesteps Congress to rewrite laws and expand welfare,” Foundation for Government Accountability (2024), https://thefga.org/research/how-usda-sidesteps-congress-rewrite-laws-expand-welfare/.
36. Matthew Nolan, “National regulatory reform progress rankings report 2023,” The Cicero Institute (2023), https://ciceroinstitute.org/research/national-regulatory-reform-progress-rankings-report-2023/.
37. Ibid.
38. Idaho Executive Order 2020-02 (2020), https://iic.idaho.gov/wp-content/uploads/2020/06/Executive-Order-2020-02-Transparency-in-Agency-Guidance-Documents.pdf.
39. Ibid.