But the sorry bunch of regulatory reform carrots being dangled under the nose of business is wrinkled, shriveled and of little nutritional value for the state’s economy and job growth.

Passage of Senate Bill 617 last year offered a small step towards getting job-killing regulation under control in the future, but did nothing to lift the existing burdens on businesses trying to survive and grow. SB 617 did include an economic analysis procedure for changes in regulations with an economic impact of $50 million or more, and an Economic Impact Assessment for lesser regulations.

The legislature also passed Assembly Bill 29, which established the Office of Business and Economic Development to be the state’s lead entity for economic strategy in business development, private sector investment and economic growth.

But the message about regulatory reform became terribly mixed when Gov. Jerry Brown talked about the new office in his State of the State speech. Brown said, “Last year, I appointed a top advisor with an impressive background in the private sector and charged him with finding out what doesn’t work for business in this state and how to fix it. What he heard consistently was that business needed an effective champion to navigate the state’s plethora of complex laws and regulations which can discourage investment and job creation. You enacted a law to restructure our office of business development and place it in the governor’s office.

“Under the name GO-BIZ, we now have a point of contact at the highest level for businesses large and small. More than that, the GO-BIZ office is staffed with people who understand what it’s like to be in business and stand ready to intervene and give real help to get businesses open and projects off the ground.”

In other words, the governor as much as conceded that California’s overgrown regulatory maze is so complicated, burdensome and entrenched that business owners must have a new team of government experts guide them through the thicket. Yeah, there’s a plan that will attract tens of employers. 

At base, GO-BIZ is going nowhere under the anemic reforms in SB 617, especially when it is considered that the new “Standardized Regulatory Impact Analysis” requires that regulatory costs and burdens on employers be balanced in all cases against such “non-monetary” considerations as, “protection of public health, safety, the environment, prevention of discrimination, promotion of fairness or social equity and the increase in openness and transparency in business and government.

"Social equity?" So much for regulatory reform from SB 617.

If the governor and the majority in the legislature are even halfway serious about helping California to become prosperous again with full employment, they need to look at real world measures in regulatory reform, beginning with the  California Code of Regulations to improve the performance and quality of service delivery in government.

The California Code of Regulations, overseen by the Office of Administrative Law, deals not only with regulations stemming directly from legislation, but also with what they call “underground regulation,” which most often is what some bureaucrat happens to think at the moment. Underground regulation is defined as “rules issued by state agencies, but not adopted according to Administrative Procedure Act standards.”

The Office of Administrative Law accepts petitions challenging alleged underground regulations, and then looks into the legalities. As of Jan. 25, 2012, OAL had 62 regulatory cases under review for adoption, amendment or repeal, or some combination of the three. There were 4 regulations repealed, 49 amendments and 20 new regulations adopted. None of the 13 challenges to regulations came from private businesses, and the Department of Corrections and Rehabilitation accounted for nine of those.

Another huge regulatory problem depressing the private sector in California is failure to recognize the fact that businesses must also answer to municipal, county and federal regulations. And those proposing new state regulations often fail to allow for the cumulative effect of all three regulatory levels to avoid duplication or at least harmonize the rules.

California needs the kind of continuing regulatory review proposed in SB 396. This Republican bill would have required review of all regulations at least 20 years old, which haven’t been reviewed in 10 years. In a fast-changing world, regulations are as about as perishable as canned foods, and should carry an expiration date lest they needlessly kill jobs.

Senator Jean Fuller’s SB 401 would have required all regulations by any state agency to include a “sunset” provision repealing the regulation after a certain period of time  to give regulators and the regulated a chance to examine the regulation’s effectiveness and continued need.

There are other good ideas for regulatory reform that couldn’t find majority party votes in the last session of the legislature, including:

·         Third-party review and analysis of agency assessments as dealt with in SB 196. State agencies have little incentive to find fault with their own operations absent adult supervision;

·         Requirement that state agencies examine potential adverse economic impact from any new or amended regulation as suggested in SB 400.

·         Extension of the time in which the regulated can prepare for the imposition of a new or amended regulation as  proposed in SB 553, which would have delayed implementation of regulations with a $10 million or more impact until 180 days after it is filed with the Secretary of State, rather than after 30 days as is current law.

In looking at regulatory reform needed to improve California’s economy, what was done last year was better than nothing…but not by much. The optimistic view is that the heavy-handed command and control tactics in Sacramento may be on the way out. But a more realistic view suggests that the majority in control is just trying to look pro-business and jobs in an election year by doing the minimum and declaring victory.