Monday, October 22, 2012

new business

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The U.S. Small Business Administration, Office of Advocacy (hereafter referred to as

SBA Office of Advocacy) contracted with Management Research and Planning Corp.

(MRP) to study what state and local governments were doing to mitigate burdensome

regulations on small business entities. The analysis of this study looked at how state

efforts compared to federal protection under the Regulatory Flexibility Act (RFA), the

Small Business Regulatory Enforcement and Fairness Act (SBREFA) and Executive

Order 1866. It also studied what unique methods states were using to protect small

businesses from burdensome regulations. As little was known prior to this effort as to

what states were doing to protect small businesses from burdensome regulatory actions,

this study was contracted with the goal of identifying best practices in reducing small

business regulatory burdens and sharing those best practices with all state and local


The research discovered that few states are actively implementing protections for small

businesses against burdensome regulations, with fewer still implementing meaningful

programs that are genuinely benefiting the small business community. Implementing a

program that provides true protection to small businesses requires well- written legislation

and executive orders, as well as the political support of the state government, particularly

the governors office, to ensure these written protections are enforced. As the body of

this report demonstrates, laws and executive orders that do not garner the support of the

governors office typically fail in providing the regulatory protection to small businesses.

While there are several elements of government support that can make or break the prosmall

business environment, ensuring regulatory agencies do not encumber small

businesses with burdensome regulations is an integral part of this task.

Beyond the element of gubernatorial support, the states that actively sought to mitigate

regulatory burdens demonstrated that there are various ways to accomplish this mission.

While some states followed some element of the federal model, others incorporated

unique elements that proved effective in reducing regulatory burden. These elements

typically involved independent bodies that reviewed agency regulations to ensure they

measured the economic impact of the regulation and that this impact would not unduly

burden small businesses. Even one state, Arizona, provided their independent review

board the authority to block regulations that were determined to be burdensome,

providing a unique and powerful program to protect small businesses. This regulatory

protection system is likely one of the main reasons why Arizona and Phoenix have been

rated so highly as a great place to start a small business by Inc. magazine.

This report clearly identifies the level of success state governments are achieving in

reducing regulatory burdens on small businesses. The vast majority of states are falling

short in even attempting to protect small businesses from regulatory burden. Some states

are trying but are falling short of adequately protecting small business interests

(according to small business advocates like the National Federation of Independent

Businesses (NFIB)). A few states however are providing shining examples of how

governments that support the small business community can achieve success in

mitigating burdensome regulations. These states processes and other information and

analysis collected in this report provide a substantive overview of where state

governments currently stand in averting regulatory burden and identify best practices that

can be applied to improve the regulatory climate for small businesses.

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