McKenna appears at a Lacey news conference with state auditor Brian Sonntag.

LACEY, Oct. 15.—Following up on a blistering state audit that concluded two decades of regulatory reform have fizzled for lack of leadership, Republican Rob McKenna Monday promised to make the issue a top priority if he is elected governor. That’s because he means business.

“We are focused intensively on lowering the cost of doing business in this state, so with regulatory reform we are going to be keeping that promise,” he said. “We are going to remain very, very focused on it in a way that has been lacking in prior administrations.”

Consider it McKenna’s response to Democrat Jay Inslee’s oft-repeated promise that he is going to “focus like a laser beam” on creating jobs. This one might be a little easier to fulfill, as it doesn’t require the economy to cooperate. But it is going to require McKenna to overcome resistance from state agencies. And it also means McKenna may have to utter one of the scariest three-word phrases in all of government: Big computer projects.

McKenna met with reporters at a Lacey restaurant, O’Blarney’s Irish Pub, where he was flanked by members of the National Federation of Independent Business, which has endorsed McKenna, and by state Auditor Brian Sonntag, who is chairing this year’s ‘Democrats for Rob’ effort. McKenna and Sonntag pointed to the regulatory reform performance audit released by the auditor’s office last month, which concluded that two decades of promises to streamline regulation and reduce the burden on business have fallen far short of their lofty goals.

Sonntag said it’s a matter of commitment from the governor. “We want to see some change in Olympia, and the needed change is going to come from the top,” he said. “That’s why I’m supporting Rob McKenna.”

Twenty Dismal Years

Every governor since Mike Lowry has announced an effort to reduce the burden on business. Task forces have been appointed, agency “subcabinets” have been established, and executive orders have been issued, and while the commitment often lasts longer than the press conference, the report said it doesn’t run very deep. The state’s business regulations remain a difficult-to-navigate patchwork of rules that the average small business owner finds bewildering, it said. Even when agencies have launched efforts to overhaul their rules, they don’t have mechanisms to assess whether their work has done the job.

The state right now requires 1,377 different permits and inspections, overseen by 26 state agencies. Right now the typical businessperson who wishes to open a convenience store with a gas pump must deal with 11 different state agencies. Gov. Christine Gregoire laid out a goal of establishing a “one-stop” website where business permits might be obtained, but only 16 percent of them are available through the state’s master licensing site, and many of the most popular permits cannot be obtained there. Three state websites currently serve as central information clearinghouses but none of them are complete, and an entrepreneur must consult individual state-agency websites to determine the rules with which he or she must comply. State agencies largely ignored a law that required them to estimate the amount of time it would take to process a permit.

Then there was that holiday from rules: In November 2010, Gregoire announced a moratorium on all but the most essential regulations from state agencies, in hopes of reducing the burden on recession-strapped businesses. So instead of 17,000 pages of regulations, the state got 13,000 pages.

Will Bring Business Focus

McKenna said he will demanding agency directors have private-sector experience, and by reaching out to stakeholder groups to find out how they are being served. He pledged to continue work to build a one-stop site, and said he won’t let agencies off the hook.

“You have to actually measure the results of what you are doing,” he said. “In other words, it isn’t enough to pass a bill that directs the Department of Revenue to create a massive licensing system. You actually have to measure the outcomes and then hold people accountable against those measurable results. We will be doing that in every agency, requiring agency strategic plans include measurable results for regulatory reform and streamlining and will include feedback from stakeholders. And we will have to evaluate the people in the state agencies annual reviews against those results. That typically isn’t happening in most state agencies, frankly.”

One Little Hitch

The dream of a one-stop site may not be so easy to accomplish. One of the reasons cited by the report for the long delays in launching such a site is that many state agencies use antiquated computer systems that don’t play well with others. Some use different payment procedures – the Department of Revenue site takes credit cards, some agencies don’t. The Department of Revenue itself says it will take a big computer upgrade to absorb all the functions required.

McKenna said he thinks those technical obstacles can be overcome, and the real problem is resistance to change and a lack of leadership. He noted the example of a failed $40 million payroll system at King County, where he served as a councilmember. The project collapsed because county staff insisted that expensive software be modified to accommodate their business practices. The city of Seattle, meanwhile, achieved success because it modified procedures to fit the software. “So I am going to remember that lesson and that experience in watching the King County executive crash and burn on that,” he said. “And we are going to make sure that we take advantage of already developed products as much as we can.”

McKenna said you have to think of regulatory reform as a different kind of “lean” — a reference to the latest management buzzword that has taken the place of “excellence,” “reinventing government,” “Baldridge” and “Six Sigma” when the talk turns to government efficiency. It’s the big thing Inslee talks about in his stump speeches, when he explains how he’ll avoid raising taxes. McKenna said it makes sense to apply the concept to the way the business community is served by state agencies.

“I just want to make sure that when we think about lean, we apply it to regulatory processes, permitting process, licensing processes, not just other agency operations and outlays, which is typically what people are thinking about when they are considering where they going to apply lean techniques,” he said. 

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