Maryland Taxpayers Association
Press Conference
November 8, 2002

MARYLAND'S REGULATORY BURDEN
by Edward L. Hudgins

The cost of government regulations can be as high as the tax burden. Regulations, like taxes, place financial burdens on individuals and enterprises and transfer resources from some pockets to others. Maryland's state and local regulations slow economic development and job creation; by burdening the economy, they reduce state revenues; and when their real costs and effects are ignored, they divert resources and manpower away from real problems.

The Burden

We can project the Maryland state regulatory burden based on studies of the federal burden. The best estimates of the federal burden is about $945 billion, which is about 9.4 percent of the Gross Domestic Product and 47 percent of the federal budget.

We can assume that the burden of regulations created by the state and localities is similar to the federal burden. States and localities regulate occupational licensing, labor policy, wages, solid waste disposal, and land use among other things.

Assuming the same cost relations hold at the state level as at the federal, the Maryland state and local regulatory burden would be 47% of state and local expenditure or 9.4 % of the Maryland's Gross State Product, or about $17.5 billion.

The Needed Review

States like New York, New Jersey, Massachusetts, Virginia have instituted regulatory review processes. The federal Office of Management and Budget's Office of Information and Regulatory Affairs prepares reviews of proposed regulations. Taking lessons from these efforts, the new Maryland governor should:

  • Create a panel in his office to review every regulation to reduce redtape, complexity, duplication and contradictions. A template should be applied to determine the specific goals of each regulation, whether they perform functions that can or should be done privately, the exact costs and benefits of regulations, and whether they benefit limited group at the expense of others. Using this approach Massachusetts Gov. Weld rescinded 21% and modified 47 % of state regulations.
  • If legislation is needed to change regulations, propose such measures.
  • Establish a review process in the governor's office to review all newly proposed regulation for constitutionality, costs, benefits and less costly alternatives.

More information: Edward Hudgins, (202-296-7263).
Mr. Hudgins is a member of the board of the Maryland Taxpayers Association (www.mdtaxes.org)