Since taking office, Maryland Governor Larry Hogan has taken some important steps to make good on his pledge to promote Maryland’s economic growth. These steps include restraining government spending through a proposed 2% cut in the state’s budget, reducing fees paid by Maryland’s citizens to state agencies for various services by $10 million a year, and focusing attention on regulatory reform.
These are commendable steps in the right direction.
But I don’t doubt that Governor Hogan knows there is more
that can be done in each of these areas.
For example, in a blog published in August, Maryland
Needs to Improve Its Regulatory Climate – Part II, I offered some specific
suggestions for improving the state’s regulatory review process that would
provide a more rigorous analysis of the costs and benefits of regulations and
assessment of their ongoing effectiveness.
In a July piece, Maryland’s
Occupational Licensing Regime Hurts the Poor, my colleague, Free State
Foundation Research Associate Michael Horney, explained how overly broad
occupational licensing requirements limit economic opportunities for Maryland
citizens. As he pointed out, “because consumers ultimately pay higher prices as
a result of the restricted competition, the increase in prices is
disproportionately harmful to the poorest consumers.”
Another area deserving attention for potential reform
relates to business licensing, a close cousin to occupational licensing, but
nevertheless distinct. There are literally more than 1000 state licenses that
must be obtained in order to start various types of businesses in Maryland. Of
course, local governments have their own licensing requirements that apply on
top of the state requirements.
The statewide
business licenses requirements, administered by the newly
named Department of Commerce, are arrayed in 19 different categories,
ranging from “Accommodation and Food Services” to “Waste Management and Remediation
Services.” I invite you to click on any one of the 19 categories and see how
many different licenses are required for various subcategories and
sub-subcategories. You will see why the overall number of licenses associated
with various businesses exceeds 1000.
Just by way of example, in order to start and operate a race
track in Maryland, there are 18 different required licenses. For a restaurant,
the number is up to 9; for a landscaping business up to 13; and for a lemonade and
baked goods stand up to 3.
I am not suggesting that many of the licenses required are
not warranted in order to protect consumers and workers from potential health
and safety hazards. But I do suggest that a serious review of the licensing
requirements would reveal that it is overbroad and that many of the current
license requirements could be eliminated or consolidated.
Simplification and rationalization of the licensing regime
will make it easier – and less costly – to start and operate a business in
Maryland. In line with other of Governor Hogan's initiatives, this would be another important pro-growth measure that would benefit
Maryland’s economy and improve its business climate.
Now that the Department of Commerce has changed its name,
perhaps, with assistance from the Maryland Economic Development and Business
Climate Commission, it can undertake the important work of reforming the
state’s business licensing regime.
Posts
