Colorado is the sixth-most regulated state in the country and nearly half of its roughly 166,000 regulations are “excessive or duplicative,” a finding that poses negative ramifications on economic growth, on productivity and, ultimately, on residents, according to a new study from the state’s chamber of commerce.
The study commissioned by the Colorado Chamber of Commerce is the latest report to examine the state’s regulatory environment and to argue that the regulations lead to job losses associated with compliance costs and lost sales.
The chamber released its study following another report showing that Colorado has slipped behind other states in terms of economic strength and that its economy is projected to grow — albeit at a slower pace in 2025.
“Colorado’s regulations are consistently the top concern in every business survey we’ve conducted in recent years,” Loren Furman, the chamber’s president and CEO, said in a news release accompanying the report. “If we don’t get our regulatory climate under control, we’re putting future jobs and economic growth at risk.”
To that end, Furman said the chamber is preparing a “bold legislative package to tackle this growing burden,” adding that will be her organization’s “top priority going into 2025.”
“We look forward to working with legislative leadership and the Governor’s Office to bring meaningful regulatory relief to the Colorado business community,” she said.
It remains to be seen how receptive the Democratic-run Colorado General Assembly is to “establishing a hard limit,” as suggested by the study’s authors, on the number of state regulations. The pace of industry regulations “surged” from 2020 to 2023, according to the report. Those are years in which Democrats dominated the state Capitol.
Democrats still hold the levers of power in the legislature and in statewide offices, notably the governor’s office.
The study said several Colorado industries are more heavily regulated than the U.S. median, and some have seen more growth in regulations compared to others within the state.
Notably, the pipeline transportation, personal services, chemical manufacturing, utilities, and petroleum and coal products manufacturing industries in Colorado are seven times “more regulated” than the median state in those sectors.
For example, the U.S. median number of regulations in the non-metallic, mineral manufacturing sector is nearly 400. In Colorado, that number is more than 3,000.
When it comes to “environmental regulation,” Colorado ranks among the most regulated states in America, “even surpassing New York in terms of regulatory burden,” the report said.
Colorado has yet to reach California-style levels of regulation, but it “is moving in that direction,” the study said.
“The stringent regulations in California have forced a shift toward natural gas,” the study said, noting natural gas is a lot more expensive than coal. That “shift,” the study said, poses “major implications for every business” since all companies rely on energy.
“If the trend in regulation continues and Colorado catches up to California, the highest regulatory burden state, higher energy costs are likely to follow. This could result in a 90% increase in electricity prices,” the study said.
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Of Colorado’s “distinct” 165,994 state regulations, the study estimated that 45% can be classified as “duplicative or redundant.”
“These rules tend to be needlessly complex and time-consuming, leading to frustration for individuals and businesses trying to comply with regulations or to access services,” the study said.
In a news release, Memo Diriker, president and CEO at StratACUMEN, the group commissioned by the chamber to conduct the study, said the problem addressed in the report is the “unintended consequences of these business restrictions, the unforeseen duplication that sometimes happens, and the need for clarity and transparency in policy development and policy review.”
In response to what it calls a “growing regulatory burden,” the chamber said it is launching a Regulatory Affairs Policy Council to engage regulatory agencies and help lead the organization’s advocacy efforts.
Other key findings of the study:
Business restrictions affecting Colorado’s private industries grew by over 7% from 2020 to 2023, while federal regulations increased by only 1.3% during the same period.
For every 10% increase in state regulations, there is a direct loss of 36,000 jobs and 9,000 firms in Colorado.
Excessive business restrictions slow productivity and economic growth by 1%-2% and increase consumer costs by 1% each year. These higher costs have an 18% higher impact on lower-income Coloradans.
The study made several recommendations, such as establishing a “hard cap” on the number of regulations, setting a concrete reduction target — such as 30% fewer regulations over three to five years — and regulatory sunsets.
A separate report released this week noted how Colorado has slipped compared to other states in terms of economic strength.
Indeed, over the last 15 years, Colorado had been among the strongest economies in the U.S. Not anymore.
The 60th annual outlook from the Business Research Division at the University of Colorado Boulder said that, between 2008 and 2023, Colorado topped the country across major economic indicators.
The state had the 5th fastest-growing gross domestic product (GDP) and employment growth, as well as the 3rd-fastest personal income growth rates in the country over the 15-year span. It also had the fastest-growing home appreciation.
Lang Sias, a former legislator, on Tuesday noted how Colorado’s “free enterprise” competitiveness — a set of metrics developed by the Common Sense Institute, where he serves as a fellow — has been declining.
That, he said, doesn’t bode well for Colorado or low-income residents, who often bear the brunt of slower economic growth.
Sias said it’s important for policymakers to conduct a “dynamic analysis” of each legislation that, among other things, examines its potential impact on Colorado’s ability to compete with other states before passing one.
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Publish date : 2024-12-10 04:13:00
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