Arizona’s Army of Reformers Is Defeating Red Tape

In Ancient times, Greek armies used a battle technique known as a phalanx, which involved soldiers lining up in close formation in a block, with their emblemed shields held high and spears jutting forward or in the air. The tactic was perfected by none other than Alexander the Great, who is said to have gone undefeated in battle. In the same way that a phalanx crushes through enemy lines, a regulatory moratorium creates a rigid barrier even the most pernicious red tape will struggle to penetrate.

Take what’s happening in Arizona, a state that has been an exemplar in routing the red tape enemy. Last week, Governor Doug Ducey signed an executive order renewing a now seven-year-old moratorium on rulemaking from state regulatory agencies. The order requires governor approval before agencies may move forward with regulatory changes, and agencies must recommend three regulations for repeal — from the stack of existing outdated, obsolete, and confusing rules — for each new one added to the rulemaking pile.

Other states should pay close attention to the example set by the Grand Canyon State, as the governor’s red tape reforms thus far have produced some notable results. According to the Ducey administration, since the moratorium was first put into place in 2015, Arizona has eliminated or improved upon 3,047 regulations, saving the economy nearly $170 million.

Meanwhile, the “1-in, 3-out” policy, which has been in place since January of 2020, has resulted in further removal of regulatory barriers. In 2021 alone, for every new and necessary rule, 25 were repealed (not counting emergency regulations). 231 regulations were removed, saving approximately $11.6 million in operating costs.

These benefits will likely compound over time as well, as savings are reinvested back into Arizona’s economy.

Its light regulatory touch may help explain why Arizona is outpacing the nation on some employment metrics. Arizona’s job growth rate is expected to beat the nation’s by more than 3-to-1 over the next decade. The Arizona Office of Economic Opportunity estimates that Arizona’s employment will grow by 2.2 percent per year on average between 2020 and 2030, compared to 0.7 percent annually for the United States as a whole.

With the moratorium in place, individuals and businesses can confidently anticipate that the regulatory burden will remain low. Arizona’s rule volume already pales in comparison to other states. According to research from the Mercatus Center, Arizona has 64,796 regulatory restrictions, less than half the national average of about 137,000. Just as importantly, the amount of state regulation has roughly held steady since 2017, when these statistics started being tracked. Since regulations usually grow without reforms, this suggests that the regulatory moratorium is having its intended effect.

One area where especially problematic red tape arises is occupational regulation. Boards and commissions populated with members of the regulated profession put in place restrictions intended to keep competitors out. This hits low-income individuals especially hard, who don’t have time for additional education requirements or money to pay expensive licensing fees. It hits individuals leaving correctional facilities, who are looking for a chance to turn their lives around. Arizona has been a leader in occupational licensing reform by passing the first universal licensing recognition law in the nation, requiring the state to acknowledge out-of-state licenses held for at least a year.

From comprehensive occupational licensing reform to strict limits on regulatory growth, the Ducey administration has taken tangible steps to streamline state government and to position Arizona as one of the best states for working and doing business. Now, the governor is thinking about his legacy, which means looking for ways to institutionalize the reforms his administration has — like Alexander the Great — championed.

Enacting a permanent regulatory moratorium — where regulations may only be enacted when there is a demonstrated need and the governor has given explicit approval — is a good first line of attack. A long-term requirement that any new regulation be accompanied by the exit of another would be an excellent way to back up the moratorium with reinforcements.

Much like a Greek army can crush its enemies with a phalanx, a regulatory moratorium, if enforced with militaristic precision, has the power to crush the type of red tape that makes neighboring states like California so difficult to live and work in. Arizona should look to make its moratorium a permanent marker on the regulatory battlefield. This would provide an economic boost to workers and businesses by signaling to red tape that its days in Arizona are numbered.

James Broughel is a senior research fellow and Susannah Barnes is an MA fellow with the Mercatus Center at George Mason University. Originally published by RealClearPolicy. Republished with permission.