Regulatory Review in the Land of Lincoln

Sofie E. Miller

by Sofie E. Miller, Senior Policy Analyst

October 25, 2016

On October 17, Illinois Governor Bruce Rauner signed Executive Order 2016-13 to create the Illinois Competitiveness Council, which is charged with reviewing existing state rules to eliminate unnecessary regulatory burdens. According to Governor Rauner, this decision comes as a result of public frustration with state agencies’ outdated, redundant and/or inconsistent regulations. As the executive order states,

a comprehensive review of existing administrative rules and internal agency policies is essential to determine their current necessity and relieve citizens, businesses and social service providers from the crush of unnecessary, outdated and inconsistent regulations…

Illinois isn’t the first to recognize how outdated rules can negatively affect citizens and businesses. Earlier this year, Kentucky Governor Matt Bevin launched the Red Tape Reduction Initiative to revisit existing rules. To date, the initiative has reviewed over 4,700 rules, 88 of which have been repealed and 378 of which have been targeted for amendment. Before that, in 2015 Maryland Governor Larry Hogan issued an executive order establishing the Regulatory Reform Commission to review Maryland’s regulatory climate and identify regulatory barriers to job creation.

These efforts on the state level also seem to build off of the federal efforts that were initiated by President Obama’s Executive Order 13563, which instructs agencies to “consider how best to promote retrospective analysis of rules that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned.”

This retrospective review of existing rules is necessary for a well-functioning regulatory process. On the federal level alone agencies issue thousands of new regulations every year, but old ones are only rarely removed. Regulations, unlike other government programs, aren’t revisited during the annual appropriations process, and as a result they seldom get a hard look review after they’re issued. This conundrum calls for retrospective review, by which agencies can evaluate the effects their existing rules are having and make changes accordingly based on new information.

In issuing his executive order, Governor Rauner recognizes that regulation in Illinois “has placed a tremendous regulatory burden on its citizens, social service providers and businesses that increase the cost of doing business in Illinois, stretch the resources of social service providers and prevent our citizens from obtaining critical services in a timely manner.” Because regulation is such a powerful policy tool, policymakers are wise to revisit existing rules to evaluate whether they still address the problems they were intended to solve.

Rauner’s executive order recognizes another important aspect of regulation that is often overlooked: its effects on competition. For example, the federal government has a long track record of issuing regulations that create barriers to competition. State regulation, too, can reduce the ability of businesses to compete with businesses in other states. It can also protect incumbent interests at the expense of innovators and consumers, as local debates in Illinois communities over the regulation of Airbnb have evidenced.

When state-level regulation becomes too onerous, citizens vote with their feet, and competition among the states to serve citizens can lead to regulatory reforms like this one. Competition between states to provide businesses and consumers with a regulatory structure that encourages and attracts innovation and entrepreneurialism is healthy. In this case, Illinois trails behind other states that have already implemented reforms to their regulatory systems to reduce anticompetitive effects and redundancy, including regional neighbors Indiana, Michigan, and Wisconsin.

Regulation, whether on the state or federal level, is a powerful policy tool that has the potential to affect consumers, competition, innovation, and entrepreneurialism. The Illinois Competitiveness Council takes a step in the right direction by recognizing the importance of this dynamic and prioritizing the review of existing rules to ensure that the state regulatory process better serves the people of Illinois.