Growing and making Iowa’s economy more competitive is a priority for Gov. Kim Reynolds. Since assuming office, she has placed an emphasis on making Iowa’s tax code more competitive by lowering individual and corporate income tax rates. Further, Gov. Reynolds has controlled the growth of government spending by following prudent budget policies.
Low tax rates and limited spending are two crucial pillars for a sound economic policy. A third pillar, which is often forgotten, is reducing the regulatory burden. Gov. Reynolds has begun to address the regulatory burden in Iowa by issuing an executive order that places a moratorium on new regulations and requires a review of existing rules. This effort to reduce the barriers of “red tape” will result in a more competitive economic climate.
In her Condition of the State address, Gov. Reynolds announced that she had issued an executive order to address Iowa’s high regulatory burden. The governor stated that the purpose of the executive order is to “begin the process of lifting this dead weight from our economy over the next four years.” The dead weight the governor referred to is the growth in regulations. The Mercatus Center at George Mason University has examined the regulatory climates of the states and Iowa has the most regulations for the Plains Region.
“Over time, Iowa’s Administrative Code has ballooned to more than 20,000 pages and 190,000 restrictive terms. Many of these rules are unnecessary. Some are actually counterproductive, short-circuiting legitimate economic activity and making our state less competitive,” Reynolds said.
It should be noted that not every regulation is necessarily bad, but too many regulations will stifle an economy. Regulations are not just rules, but they also have an economic impact. They can be considered a hidden tax. James Broughel, a senior research fellow at the Mercatus Center, argues that “there is now considerable empirical evidence that the accumulation of regulations slows economic growth.”
The executive order places a moratorium on regulations and state agencies will now have to begin reviewing the existing regulations to determine their relevance and economic impact. State agencies will have four years to complete the review process. Gov. Reynolds argues that the objective of this review process is to ensure that “existing rules – each and every one – are worth the economic cost.”
“Only those that meet this standard will be reissued. The rest will be repealed. When it’s all said and done, Iowa will have a smaller, clearer, and more growth-friendly regulatory system,” Reynolds said.
This is not the first time Gov.r Reynolds has addressed regulatory reform. In 2020, the governor signed into law a historic occupational licensing reform law, which allows for universal recognition of out-of-state licenses, waive licensing fees for low-income individuals, and establish a standard for a fairer review process if a license is denied based on past criminal convictions. This measure reduces barriers to employment and recognizes the principle of the right to earn a living.
Gov. Reynolds is not alone in making regulatory reform a priority. A number of states have or are undergoing some process of reviewing regulations. As an example, former Arizona Gov. Doug Ducey enacted a moratorium in 2015, which has been in place his entire administration. During that time, Arizona has eliminated or simplified 3,047 regulations, which have saved taxpayers an estimated $169.1 million. The moratorium has now been codified in state law. Ohio has been the gold standard in regulatory reform and the legislature has passed legislation which established a goal of a 30% reduction in regulation by 2025. In addition, Ohio requires for every new regulation two must be repealed. These are just two examples of recent policy successes for regulatory reform.
Gov. Reynolds' executive order on regulatory reform is part of a larger goal of streamlining government and making it more efficient. In addition, to unshackling Iowans from the burden of unnecessary regulations, the governor is proposing to reign in the administrative state. Currently, Iowa has 37 cabinet level agencies and Reynolds is proposing to consolidate those down to 16 agencies.
Regulatory reform may not be exciting, but it is just as important as pro-growth tax reform. Iowa’s economy will only continue to get stronger and more competitive as tax rates are lowered, government becomes more efficient and smaller, and regulatory barriers are torn down.
Gov. Reynolds' executive order on regulatory reform is another major pillar of her pro-growth agenda that places the economic interests of Iowans first. The governor understands that the right to earn a living is an essential liberty and regulatory barriers should be removed to encourage work, investment, and entrepreneurship.