One of the most important priorities of state government is creating an environment that is conducive to job creation. To do this, there are many factors involved: a strong education system, an educated work force, quality infrastructure, and a competitive tax code.
However, another key factor is also creating a regulatory environment that doesn’t stifle business growth and prosperity. Wisconsin’s regulatory environment is heavily impacted by state agencies such as the Department of Natural Resources or the Department of Transportation. These agencies have the ability to create regulations that have the same impact and force as laws passed by the Legislature. However, even though these bureaucratic rules have the force of law, the bureaucrats making these rules were never elected by the public, and elected officials often never voted to approve these rules.
This is why we introduced the REINS – Regulations from the Executive in Need of Scrutiny – Act. This legislation makes several changes to improve the transparency of the administrative rule-making process in Wisconsin.
Rule-making is often a mundane affair. State agencies use rules to add additional clarity to state laws. Pending rules are referred to legislative committees, who can choose whether or not to act on them. Certainty is important to businesses, so some amount of bureaucratic red tape is inevitable.
However, the process for approving an expensive rule is no different than a rule that has little impact on taxpayers.
In 2010, the Department of Natural Resources (DNR) put forward a new rule – new requirements to limit phosphorus in surface waters in Wisconsin – to comply with a federal requirement. While a laudable goal, estimates varied substantially over how much the rule would cost. Worse still, the rule went above and beyond what was required by federal law. Unfortunately, without even a committee vote, the rule was allowed to move forward.
It was only when the DNR began to implement the rule that many local communities started to grasp the size of the problem this new rule had on them. Subsequent legislation required a detailed cost analysis. The result was alarming: The rule would cost $7 billion (including interest) to businesses and local governments (taxpayers).
Thankfully, the Legislature has taken steps in recent years to mitigate the impact of this rule on our economy. Still, more than six years later, we are still trying to undo the worst aspects of this rule. And the uncertainty continues to be a drag on Wisconsin’s economy.
The REINS Act would have prevented problems like this in the following ways:
- Allow the Legislature to require an independent economic impact analysis. This would permit an impartial third party to determine the cost of a rule instead of relying on bureaucrats.
- Require very expensive rules – those that cost more than $10 million over two years – to get approval by the full Legislature before they are enacted.
At the very least, taxpayers have a right to know what these expensive bureaucratic mandates will cost them. The REINS Act improves rule-making transparency and empowers the public to hold legislators accountable.