The administration of Gov. Scott Walker is proposing to rewrite hundreds of regulations – and to eliminate two scores more – as the governor continues to act to reduce what he calls the state’s still onerous regulatory infrastructure.
The foundation of the administration’s policy proposals is a report released last week by the Small Business Regulatory Review Board to identify unnecessary, obsolete, and burdensome regulations. The report flows from an executive order signed by Walker last February requiring state agencies to work with the board in the effort.
All totaled, the board proposed 307 changes; an additional 40 would be eliminated completely. The review board is composed of both private-sector employers and legislators.
“We can continue to improve Wisconsin’s regulatory climate by ensuring regulations are science-based and predictable,” Walker said. “Providing certainty, specifically related to state regulations, will go a long way to help the private sector create jobs.”
Walker administration officials also said they conducted a survey with 43 business organizations in which thousands of small-business employers were contacted. According to the survey, 72 percent said regulations cost more than the benefits they yield, while 70 percent said regulation imposed a significant cost on their businesses.
Some of the recommendations are sure to spark political fire, and, in fact, already have. All of the changes would be subject to legislative review – some through the rule-making process, others would require statutory changes.
Among the most controversial is a proposal to tighten eligibility to receive unemployment compensation benefits. That drew concern from Senate Democratic leader Chris Larson of Milwaukee, who feared it could foreshadow many more changes.
“Of the few details available, we know Wisconsin families and those suffering the most from slow job creation may lose important protections in the unemployment insurance program,” Larson said. “We can only conclude that there is cause for concern that this administration may remove other common-sense protections for Wisconsin’s middle-class workers.”
But Rep. John Nygren (R-Marinette) said the board’s work was part of a comprehensive reform effort, following on the heels of 2011 Wisconsin Act 46, a bill he authored, which requires agencies to be flexible with small businesses when enforcing administrative rules.
“One of our goals this session is to decrease the number of regulations the small business owner has to contend with,” Nygren said. “The cost and burden of some of these outdated regulations are a deterrent to investments and factor into the decision to do business in our state.”
Among other things, Nygren said, the regulatory reform effort modified the organization of the review board by eliminating state agency representation on it and by increasing the number of small-business representatives. In addition, the law now requires a proposed rule to be submitted to the board for review if an agency determines it would have any economic impact on small businesses, rather than merely a significant impact.
“Small business owners are the backbone to this state’s economy,” Nygren said. “We have to continue to find ways to help them and improve our economic climate. I believe the reforms to the review board and the findings of this report will help tremendously.”
In the report, the board said unemployment benefits were vital to help individuals get back on their feet after losing a job, but it also said the program’s administration is important to the economy because unemployment regulations have a direct impact on job creation and economic growth.
“Common sense changes could improve the reserve fund condition, enhance the integrity of the program, and ensure taxes paid into the fund are used properly,” the report stated.
Over the past decade, the report revealed, the unemployment reserve fund has moved from the black to the red, not only because of the recession but also because of changes in the program. In 2012, the reserve fund opened the year with a $1.2-billion hole.
“Because of the deficit and money borrowed from the federal government to cover loans to pay benefits during the recession, employers are now paying an assessment to cover the interest on this debt,” the report stated. “Employers paid $42.3 million in 2011 toward this assessment and are projected to pay $35.6 million in 2012-13.”
What’s more, the report continued, the program has been plagued by fraud.
“In 2011, there were roughly 37,000 fraudulent determinations of UI,” the report stated. “In 2010, this equated to $37 million in fraudulent payments and $41.4 million in overpayment errors. Interestingly, under current law if an individual receives a payment in error it cannot be recovered by DWD in some instances. However, if an employer makes a mistake the department can recover regardless.”
Regulations for unemployment insurance work-search requirements are needed, too, the board added, saying those requirements had not substantially changed since 1984. Specifically, the board voted to recommend increasing required work searches from two each week to four.
The board suggested requiring more documentation of those searches than now demanded and limiting the circumstances under which a person can refuse work and still receive benefits. Wisconsin’s standards are broader than those in federal standards, the board observed.
Finally, the board also suggested trimming the list of exceptions enabling people to quit their jobs and still collect unemployment compensation.
“Wisconsin currently has 18 quit exceptions that allow workers to quit a job and still receive benefits,” the report stated. “In the Midwest, the state with the next highest number of exceptions is Minnesota, with nine.”
While unemployment insurance reform was one of the most significant proposals, it was not the only one; some suggestions targeted the rulemaking process itself.
Those include establishing an off-ramp for repealing obsolete rules, sunset periods for guidance documents, and more transparency of guidance documents, the report stated.
The board recommended a change in employer sales-tax filing frequencies as well. Changing the filing threshold from monthly to quarterly for some filers – and to yearly for certain others – would benefit small, start-up ventures by reducing administrative costs for start-ups, enabling them to focus on growing their business, the report stated.
An estimated 25,439 retailers would file sales tax less frequently, with 13,510 filers filing quarterly rather than monthly and 11,929 filing annually instead of quarterly, the report observed.
The board also called for a “Wisconsin One-Stop Business Portal” to allow new business registrants to file all their information and registration requirements in one place rather than having to “scour” numerous agency websites or fill out redundant forms.
Richard Moore may be reached at firstname.lastname@example.org