Blistering State Audit Says Regulatory Reform Efforts Have Barely Scratched the Surface

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OLYMPIA, Sept. 7. – Some 20 years ago, Gov. Mike Lowry said regulatory reform was a top priority and proved it by appointing a task force. Gov. Gary Locke ordered state agencies to streamline regulation and whack unnecessary rules. Gov. Christine Gregoire issued an order to develop a one-stop state website for business.

And after all those decades of blue-ribbon panels, press conferences and political hoopla, what does the state have to show for it?

A scattershot and half-finished job, says a blistering report from the state auditor’s office. It says Washington efforts to reduce the regulatory burden on business and make things simple and understandable have barely scratched the surface.  Agencies routinely disregard regulatory reform bills passed by the Legislature. The state still doesn’t have a one-stop website for business – it has three – and even if you put them all together the information still wouldn’t be complete. And while there have been efforts by some agencies to streamline and simplify business regulations, they haven’t checked to see whether their efforts have done the job. No one holds anyone accountable.

It’s about time someone pointed out that regulatory reform has fallen short, says state Auditor Brian Sonntag, whose office is responsible for the performance audit. It’s been the stuff of campaign promises since the 1980s. The trouble is, Sonntag says, “no one has ever followed up to find out how these things have panned out.”

Next year there will be a new governor and a new auditor – Sonntag is stepping down after 20 years in office. And so he says it’s the right time to ask a few of those big-picture questions. “Talk is fine and talk is cheap, but we need to see the action,” he says.

Not Exactly One-Stop

State Auditor Brian Sonntag.

What Sonntag’s performance-audit team found was that for all the lofty goals announced by one governor after another, regulatory reform has been a low priority and follow-through has been dismal. Right now some 1,377 business licenses, permits and inspections are required by 26 different agencies. A person who wishes to open a gas station and convenience store needs as many as a dozen approvals from various state agencies. But business owners are forced to chase down information on hard-to-navigate state websites. None of them provide complete information, the report says – and that’s a serious problem. “Ultimately, anything other than complete regulatory information poses a significant and costly risk for business owners,” it says. “Understanding regulatory requirements is especially burdensome for small businesses that cannot afford to hire attorneys or consultants to help them understand and comply with the state’s regulations.”

Take the dream of a “one-stop” site for business. It’s been a biggie over the years, so big that three different sites with the same basic idea have been launched with great fanfare – meaning three stops instead of one.  And none of them do a very good job of it.

A master state licensing website provides online access to only 16 percent of the state’s 735 business licenses. Ten agencies are required by law to post all of their licenses on the site. Yet only one has done so – the Department of Revenue, which administers the site. Several of them don’t even bother — Fish & Wildlife, Labor & Industries, the Office of the Secretary of State, the Department of Social and Health Services and the Utilities & Transportation Commission. Of the ten most-requested business licenses, only two of them are available on the site.

So if you were among the 147,311 people who sought to register a limited liability corporation through the state between 2006 and 2010, you couldn’t do it there. Or register as a contractor. Or get a special-occasion license from the state Liquor Control Board.

More ‘One-Stop Portals’

A second website, business.wa.gov, established by an executive order in 2006, is supposed to be a “single, secure online portal [that] will make licensing, permitting, regulatory approvals or filings easier for business.” But it provides links to just seven of the state’s 26 regulatory agencies that require permits.

Then there’s another site, administered by the Office of Regulatory Assistance, which also is supposed to provide vital information about “federal, state and local rule-making processes and permit requirements.” But it only covers six agencies and 31 percent of the state’s business permits, and it deals mainly with environmental regulation.

The result is that anyone running a business must chase down information on websites run by the 26 agencies, all of them with a different look and feel. Information for 57 of the most requested permits is incomplete. And the report notes that numerous requirements imposed by the Legislature have been routinely disregarded – like a 2009 law that requires agencies to post information about how long it will take to win regulatory approval. That information is available just 23 percent of the time.

At the same time, the report notes that agencies have attempted to “streamline” their regulations – simplifying them, making them easier to understand and easier to comply with. But while some agencies have done a better job than others, none of them have a formal way to measure results, the state has no standards by which to judge their performance, and there isn’t much follow-up from the top.

‘Under Way for Some Time’

In a response to the auditor’s office, Marty Brown, director of the state Office of Financial Management, says regulatory reform is a work in progress. “As you are aware, Gov. Gregoire has made regulatory reform a top priority throughout her administration,” he writes. “She has issued a series of executive orders and requested numerous pieces of legislation aimed at improving how state agencies work together to reduce barriers for business, while protecting public health and safety and not compromising environmental quality that Washington citizens expect. Actions to reform Washington’s regulatory environment have been under way for some time.”

The state’s official response notes that 12 states have launched some sort of effort to develop a one-stop portal for business, but none of them have actually accomplished the goal — a fact that attests to the difficulty of the task. The report itself notes that there might be some legitimate problems – like a lack of funding for computer upgrades that would make a true one-stop state website feasible. Other excuses might raise an eyebrow, however. The report mentions that some agencies are reluctant to provide information about permit processing times because they might be held liable if they fail.

For business, the report is a vindication of gut-level assumptions that state efforts have been weak. In a statement, AWB president Don Brunell said, “One of the most frequent comments we hear from our members – particularly small business members – is how frustrated they become trying to navigate state government. AWB has long advocated for a one-stop shopping experience for employers online, where they can address multiple issues by going to one state website. This is also true at the local and federal level.

“We look forward to a thorough review of the new report, but agree with the auditor’s initial findings, namely that more can and must be done to help employers navigate the maze of regulatory agencies we have created in our state.”

It’s good to hear the auditor say it, but the findings really don’t come as a surprise, says Patrick Connor of the National Federation of Independent Business. “If it takes a couple of full-time auditors more than a year to find this information, how in the world do you expect a new small business to find it in order for them to be on the right course to be successful? No wonder Washington state has got one of the worst records of business failures in the nation. We are not a business-friendly state, we don’t make it easy, and even when agencies are directed to put the information before the public on a website, far too many of them choose to ignore the law.”





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