Patrick A. McLaughlin, senior research fellow at the Mercatus Center, and Oliver Sherouse, research analyst at Mercatus, recently released the 2016 edition of the Federal Regulation and State Enterprise (FRASE) Index. The Index ranks the degree to which federal regulation affects the 50 states and Washington, DC. The researchers found the state harmed the most by regulations is Louisiana. The state affected the least is New Hampshire.
The FRASE Index examines thousands of administrative laws regulatory agencies pass each year. The authors explain that while regulations are not pieces of legislation that typically dominate news cycles, they are still laws that often have serious consequences for those who fail to comply, such as significant fines or jail time.
McLaughlin and Sherouse say in the Index that regulations are abundant: “The Code of Federal Regulations (CFR), which annually compiles all current federal regulations, numbers more than 175,000 pages in 236 volumes. Those pages contain over one million individual restrictions that mandate or prohibit some activity. And those numbers are growing: by restriction count, the CFR is nearly twice as large as it was in 1975.”
Mercatus recently created a website called RegData, which measures the FRASE Index score. A FRASE Index score of 1 means federal regulations affect a state to precisely the same degree that they do the nation as a whole. A score higher than 1 indicates federal regulations have a higher impact on the state than on the nation, and a score below 1 means they have a lower impact on a state. To calculate the FRASE Index score, RegData counts the number of individual restrictions in the CFR by identifying the words “shall,” “must,” “may not,” “required,” and “prohibited” and assigning the words to the appropriate industries.
McLaughlin and Sherouse argue in the FRASE Index, “When a state economy is highly concentrated in one or two industries, changes in regulation on those industries can dramatically affect the state’s score on the Index. Some trends in the production of regulations, such as the growth of environmental and transportation regulations, play a large role in determining the levels of regulation on specific states.”
Following the launch of the Mercatus FRASE Index, many states have been forced to consider the costs associated with federal regulations.
Alexandria Burris, a writer for Greater Baton Rouge Business Report, wrote in a recent article federal regulations impact Louisiana more than any other state: “Louisiana’s score is 1.74, which indicates the impact of federal regulations on industries here are 74% higher than the impact on the nation overall. The state’s top ranking in the report is reflective of the large chemical, manufacturing and oil and gas industries—each of which is heavily regulated—in the state.”
Akash Chougule, director of policy for Americans for Prosperity, said in a recent press release, in which he cited the Mercatus results, New Jersey has seen a 14 percent increase in federal regulatory impact. “New Jersey ranked 38th on Mercatus’ list, as the state has not been as impacted in recent years by EPA regulations which have hit states like West Virginia, Kentucky and others hard,” said Chougule.
In a recent blog post, Vance Ginn, an economist at the Center for Fiscal Policy at the Texas Public Policy Foundation, advises states to be cautious of burdensome government regulations following the study’s conclusion that federal regulations have reduced average U.S. economic growth by about 0.8 percentage points per year since 1980. “While this doesn’t seem like a big deal, it’s important to note that economic growth compounds over time,” said Ginn. “Therefore, the negative gap between economic growth without regulations compared with actual growth grows larger as it builds on itself each period.”
What We’re Working On
Budget & Tax
FDA Went Way Too Far on E-Cigarettes
Jeff Stier, a senior fellow at the National Center for Public Policy, argues in this Heartlander article the Food and Drug Administration’s new deeming regulations effectively ban up to 98.5 percent of the e-cigarettes on the market today, potentially crippling the vaping industry. “If the FDA can’t differentiate between responsible regulation and an effective ban, let me help: Reasonable rules institute vapor battery standards, marketing restrictions and a ban on sales to minors.” Read more
Virginia House Approves Resolution Calling for Article V Convention
Virginia lawmakers are now considering a resolution that would call for Congress to convene a national convention for the purpose of drafting an amendment to the U.S. Constitution and authorizing the state to participate. This Heartlander article by Ben Johnson discusses how this effort began and how states are becoming increasingly interested in the Article V movement. Read more
Research & Commentary: Missouri Education Savings Account Bill
On April 27, the Missouri House of Representatives passed a bill that would establish the Missouri Empowerment Scholarship Accounts Program, which would provide children with special needs and disabilities with an education savings account (ESA) that could be used to help pay for tuition at a private school that may better suit their individual needs. The bill still awaits a full vote in the state’s Senate.
In this Research and Commentary, Heartland Policy Analyst Tim Benson writes, “This ESA program would be funded in a way that is similar to how tax-credit scholarship programs are funded. Individuals and businesses would receive a tax credit equal to 100 percent of the amount of their contribution, so long as the claimed tax credit does not ‘exceed the amount of the taxpayer’s state tax liability for the year which the credit is claimed.’ These contributions and ESA accounts they fund would be handled by state-sanctioned ‘educational assistance organizations.’ The state would cap the maximum amount of contributions to the program at $25 million per year. Qualifying students eligible for an ESA would receive an amount equal to 90 percent of their local school district’s average per-pupil expenditures during the previous school year.” Read more
Energy & Environment
Research & Commentary: Rhode Island Carbon Dioxide Tax Proposal
A carbon dioxide tax proposal promoted by Energize Rhode Island was introduced in the Rhode Island House of Representatives on January 27. This bill would establish a $15-per-ton fee on companies selling fossil fuels in the state, paid at the first point of sale within state lines, starting on January 1, 2017. The tax would then increase by $5 per ton each year. Proponents of the bill believe the tax will raise $140 million during the first year, 70 percent of which would be returned to households and businesses through a rebate meant to offset increases in gasoline and utility bill costs. Five percent would go to pay administrative costs, while the other 25 percent would go into the state’s Green Infrastructure Bank to help fund “climate resilience, energy efficiency, energy conservation, and renewable energy programs.”
In this Research and Commentary, Heartland Policy Analyst Tim Benson writes, “Electricity costs in Rhode Island are already the sixth highest in the nation, and instead of adding a new tax, elected officials should set their taxes at low, competitive rates that are applied to a broad base. … Building more pipeline infrastructure, for example, would bring in greater amounts of natural gas into Rhode Island and would be much more effective than a burdensome tax at lowering emissions, lowering unemployment, and spurring economic productivity.” Read more
Research & Commentary: Oklahoma ‘Medicaid Rebalancing’ is Simply Medicaid Expansion
Oklahoma legislators are now considering a Medicaid expansion proposal called the Medicaid Rebalancing Act, which is similar to the expansion undertaken in Arkansas. It would shift about 175,000 pregnant women and children off of Medicaid and into private insurance plans, which would be purchased with subsidies through the federal marketplace.
In this Research & Commentary, Senior Policy Analyst Matthew Glans argues that “while the Medicaid Rebalancing Act faces several hurdles, including federal approval for the expansion and a three-fourths vote for the tobacco tax increase, it is important to recognize the real problems expansion creates. Using a declining revenue source to pay for an increasingly expensive Medicaid expansion will fail to provide better or more affordable health care and create budgetary problems.” Read more
From Our Free-Market Friends
National Alliance for Public Charter Schools Releases New Report
The National Alliance for Public Charter Schools recently released a new report titled Demanding a Chance: Parents’ Demand for Charter Schools Continues to Grow. The report’s authors found 78 percent of parents support a charter school opening in their neighborhood and an equal number of parents favor additional school choice options, regardless of where they live. Now, more than ever, parents across the nation want to be able to choose the best public school for their child, and the results from this survey reinforce the demand for more high-quality charter schools. Read more