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Texas, often celebrated for its robust economic growth and business-friendly policies, finds itself at a crossroads when it comes to its regulatory climate. While the state’s reputation as a beacon for innovation and opportunity is well-deserved, mounting concerns over the complexity and burden of its regulatory environment highlight the need for meaningful reform.
The Scale of Regulation in Texas
Texas is no stranger to regulation. Despite its pro-business ethos, the state’s administrative code is among the largest in the country. According to the Mercatus Center’s RegData project, Texas boasted 274,469 regulatory restrictions across various sectors in 2023, making it the 5th most regulated state in the United States, just behind states like California and New York. These restrictions span industries from energy and healthcare to manufacturing and technology, creating a labyrinth of rules that businesses and individuals must navigate. Compared to other states, Texas also regulates industries that often remain unregulated elsewhere, increasing the complexity for companies operating within its borders. The sheer volume of these regulations poses significant challenges. Businesses, particularly small enterprises, often struggle to comply with complex requirements, leading to increased operational costs and, in some cases, stifled growth. The administrative burden also impacts consumers, as higher compliance costs are frequently passed down in the form of increased prices for goods and services.
The Five Most Regulated States
| Rank | State | 2023 Total Reg Restrictions |
|---|---|---|
| 1st | California | 420,434 |
| 2nd | New York | 300,095 |
| 3rd | New Jersey | 296,926 |
| 4th | Illinois | 282,040 |
| 5th | Texas | 274,469 |
The Five Least Regulated States
| Rank | State | 2023 Total Reg Restrictions |
|---|---|---|
| 44th | Alaska | 64,918 |
| 45th | Montana | 59,654 |
| 46th | North Dakota | 55,561 |
| 47th | South Dakota | 45,309 |
| 48th | Idaho | 31,497 |
Source: Mercatus Center’s RegData Project
Top Ten Industries Targeted by Texas State Regulation in 2023
| Industry | Texas Regulations | Average State Regulations |
|---|---|---|
| Waste Management & Remediation Services | 11,981 | 7,296 |
| Paper Manufacturing | 11,570 | 5,055 |
| Chemical Manufacturing | 10,960 | 6,844 |
| Utilities | 9,827 | 5,419 |
| Insurance Carriers & Related Activities | 9,316 | 5,273 |
| Petroleum & Coal Products Manufacturing | 8,072 | 7,292 |
| Educational Services | 7,215 | 3,947 |
| Ambulatory Health Care Services | 7,189 | 4,673 |
| Funds, Trusts, & Other Financial Vehicles | 7,159 | 4,712 |
| Credit Intermediation & Related Activities | 5,712 | 4,489 |
Source: Mercatus Center’s RegData Project
The Mercatus Center suggests Texas lawmakers can implement tangible steps to lessen this regulatory burden on Texans. These steps include:
- Regulatory Budget: Place a cap on the number of regulations the state can have at one time with a target lower than the current stock of regulations.
- Regulatory Sunset: Set a requirement that all regulations be removed after a time unless explicitly renewed by the legislature.
Occupational Licensing: A Critical Issue in Texas
Texas’ regulatory climate, particularly in the area of occupational licensing, has become increasingly burdensome. According to the Archbridge Institute’s 2024 State Occupational Licensing Index, Texas ranks among the worst states for its stringent licensing requirements. From hairdressers to electricians, hundreds of professions require costly licenses, often necessitating expensive training programs, lengthy application processes, and steep fees.
The impact of this overregulation is significant. Licensing requirements disproportionately burden lower-income individuals who may lack the resources to navigate these costly and time-consuming processes. Military families also face unique challenges, frequently encountering difficulties when transferring licenses across state lines, further complicating their ability to maintain employment.
Texas licenses 38 of the 102 low-to-moderate-income occupations studied by the Institute for Justice—roughly 37.25%. Many of these licenses act as barriers to entry due to their expense and complexity. The problem is underscored by the Cato Institute’s 2023 Personal and Economic Freedom Index, which ranks Texas last for occupational freedom.
Legislative Solutions on the Horizon
As the 89th Legislative Session approaches, two state lawmakers are taking steps to ease the burden of occupational licensing.
Senate Bill 99, introduced by State Sen. Bob Hall (R-Edgewood), seeks to increase accountability and transparency in the licensing process. The bill would require any proposed legislation creating or expanding an occupational license to include a statement from the Legislative Budget Board (LBB) confirming its review under the Texas Sunset Act. This measure ensures lawmakers carefully evaluate the necessity and impact of such proposals before enacting them.
House Bill 710, introduced by State Rep. Brian Harrison (R-Midlothian), proposes a framework for universal occupational licensure, allowing individuals licensed in other states to work more easily in Texas. Harrison also filed House Bill 794, which aims to limit occupational regulations to those essential for public health, safety, or welfare. Under this bill, state licensing authorities must review existing regulations by September 1, 2026, and repeal or amend those deemed unnecessarily restrictive. It also empowers individuals to petition for the repeal or modification of excessive regulations and provides injunctive relief against overly burdensome rules.
These legislative efforts signal a commitment to reducing barriers to entry, expanding economic opportunities, and reclaiming Texas’ reputation as a leader in occupational freedom. With greater accountability, streamlined processes, and universal licensure frameworks, Texans can look forward to a more accessible and equitable job market.
Texans Call for Action: The Push for Regulatory Reform
Texans are raising their voices, calling for meaningful regulatory reform to unleash economic opportunity and foster innovation. Recent polling highlights strong public support for addressing overregulation and offers actionable solutions to these pressing concerns.
One transformative proposal is adopting a regulatory sunset process, modeled after Texas’ successful Sunset Advisory Commission. This initiative would mandate periodic reviews of regulations to assess their relevance and necessity. Outdated or counterproductive rules would be repealed or revised, ensuring that Texas’ regulatory framework evolves with the times.
Another critical reform is streamlining occupational licensing. Key proposals include reducing licensing requirements for non-essential professions, implementing universal license recognition to welcome out-of-state workers, and creating alternative certification pathways to expand access to careers.
To further cut through bureaucratic red tape, advocates are championing a red tape reduction initiative, which would establish clear targets for reducing regulatory restrictions. By eliminating redundancies and focusing on impactful regulations, agencies can better serve the needs of Texans.
Finally, increasing transparency and accountability in the regulatory process is essential. This includes requiring cost-benefit analyses for new regulations, providing robust public comment opportunities, and ensuring that new rules serve the broader public interest—not special interests.
By tackling these challenges head-on, Texas can reinforce its position as a leader in economic freedom. Regulatory reform offers the promise of greater opportunities for businesses and individuals alike, laying the groundwork for a more innovative, competitive, and prosperous state.
The Economic Benefits of Regulatory Reform in Texas
Streamlining Texas’ regulatory climate offers several compelling benefits. Reducing unnecessary restrictions can unleash entrepreneurial potential, encouraging startups and expanding opportunities for small businesses. Simplifying occupational licensing processes makes it easier for Texans to enter the workforce, particularly in high-demand industries. Fewer regulatory hurdles can reduce the cost of goods and services, providing relief to families across the state. A leaner regulatory environment fosters creativity and innovation by allowing businesses to focus on development rather than compliance.
Challenges Ahead: Overcoming Barriers to Reform
While the case for reform is strong, it is not without challenges. Deregulation often faces resistance from entrenched interests that benefit from the status quo. For instance, professional licensing boards and associations frequently advocate for stringent licensing requirements, citing public safety and quality assurance. Striking a balance between necessary safeguards and excessive restrictions will require careful deliberation and stakeholder engagement. Moreover, the legislative process itself can be a hurdle. Regulatory reform demands political will and collaboration among lawmakers, agencies, and advocacy groups. Without bipartisan support and sustained public pressure, proposed changes risk stalling in committee rooms.
Texas at a Regulatory Crossroads
Texas stands at a pivotal moment. By addressing the burdens of its regulatory climate, the state has an opportunity to reaffirm its status as a national leader in economic freedom and opportunity. Reforms such as adopting a sunset process for regulations, reducing occupational licensing barriers, and implementing a red tape reduction initiative can pave the way for a more efficient and equitable system. As Texans demand change, the path forward will require bold leadership and a commitment to balancing public welfare with economic dynamism. By embracing these principles, Texas can chart a course toward a regulatory environment that empowers its people and fuels its prosperity.
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