Many states have slowed the pace at which they added new regulations or even reduced the total number, but Colorado has moved in the opposite direction and will pay an economic price for doing so, according to a study sponsored by the Colorado Chamber of Commerce.
“A lot of these regulations could be considered redundant or excessive,” said Memo Diriker, CEO of StratACUMEN, a business analysis and research firm that spent the past year studying Colorado’s regulatory structure.
Diriker, presenting the study results last week on a call with journalists and political leaders, said the number of new rules and regulations in Colorado rose 2% between 2017 and 2020, for a 0.7% annual growth rate. Between 2020 and 2023, the number of rules rose 7.1%, representing a 2.3% annual growth rate.
Federal regulations, under the Biden administration, rose a more modest 1.3% during that same period.
With Democrats solidly in control of the executive and legislative branches in Colorado, they have been able to pass more rules, especially when it comes to environmental protections. Public utilities and natural resource companies have seen the most new rules, with health services, social assistance and banking and insurance also seeing more rulemaking.
Rep. Bob Marshall, D-Highlands Ranch, was on last week’s call. He said he is all for taking a light touch when regulating businesses and streamlining duplicative rules. But he disputed the definition of “excessive” regulation as being in the eye of the beholder, especially when it comes to environmental protections, which have strong public support in Colorado.
“We need far stronger environmental regulations along the Front Range than what are required in other areas,” he said. “This study was far more of an advocacy piece.”
If there are duplicative rules, then the Chamber should bring them forward so they can be addressed, he said. But private property rights don’t include the right to damage or degrade the quality of the air, water or land.
Colorado now ranks as the sixth most regulated state in the nation, with nearly half, or 45%, of its nearly 200,000 rules and regulations meeting the definition of “excessive” or duplicative, Diriker said. Add in federal restrictions and businesses in the state must deal with 1.3 million regulatory restrictions.
Five industries in particular — pipeline transportation, personal services, chemical manufacturing, utilities, and petroleum and coal products manufacturing — are up to seven times more regulated than the median of other states with companies in those industries, the study found.
Pipeline operators saw a 133% increase in the number of rules they must deal with between 2020 and 2023, while personal services providers saw a 112% increase in those three years.
Diriker said most rules and regulations are passed with the best of intentions and seek to address a legitimate problem or concern. What happens is that rules interact with each other and compound the burden on businesses, creating a slew of unintended consequences.
For every 10% increase in state regulations, Colorado loses about 36,000 jobs and 9,000 firms all other things being equal, while economic growth slows 1% to 2% and prices increase 1%, StratACUMEN estimates. Higher inflation, which hits lower-income households the hardest, boosts the number of people living in poverty in the state by 2.5%.
“Colorado’s regulations are consistently the top concern in every business survey we’ve conducted in recent years,” said Colorado Chamber President and CEO Loren Furman in comments accompanying the report. “If we don’t get our regulatory climate under control, we’re putting future jobs and economic growth at risk.”
The chamber plans to launch an aggressive legislative package seeking regulatory relief and greater analysis for proposed regulations. Just as large-scale developments must provide an environmental impact assessment, one line of thought is to require “business impact” analysis done on new legislation and rulemaking.
Toward that end, the chamber is launching a new Regulatory Affairs Policy Council in January to lead reform efforts and to participate in state regulatory hearings. Julie Rosen, a shareholder with Welborn Sullivan Meck & Tooley P.C., will head up the committee.
“This is not the first time the Chamber has started to create a narrative like this. I acknowledge there is always room for streamlining, but there are reasons these regulations are in place,” said Christopher Kennedy, CEO of the left-leaning Bell Policy Center and a former state legislator representing Lakewood.
More can be done to help small businesses deal with regulations, but Kennedy said an approach of tossing out regulations en masse and trusting businesses to do the right thing without accountability is a non-starter.
Democratic Gov. Jared Polis last week fired up a buzzsaw on his desk to cut into a 435-page pile of outdated executive orders going back decades. The symbolic gesture highlighted his administration’s elimination of more than 200 executive orders.
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