Deregulation becoming Ducey’s most active front

Jeremy Duda//August 1, 2016

Deregulation becoming Ducey’s most active front

Jeremy Duda//August 1, 2016

Gov. Doug Ducey (Photo by Gary Grado, Arizona Capitol Times)
Gov. Doug Ducey (Photo by Gary Grado, Arizona Capitol Times)

There is no more consistent theme to Gov. Doug Ducey’s one-and-a-half years in office, and no area where he’s been more aggressive, than deregulation

Ducey has made deregulation a top priority of his administration since the moment he was sworn into office. And he’s been exceptionally active in that arena.

By some metrics, Arizona is a relatively low-regulation state. The Pacific Research Institute, a free-market think tank, rated Arizona as the 18th least burdensome state when it comes to regulations affecting businesses. In its Freedom in the 50 States study, George Mason University’s Mercatus Center ranks Arizona as the 11th least burdensome state.

By other measurements, however, Arizona lags far behind. A 2012 study by the Institute for Justice, a free-market conservative organization, ranked Arizona as one of the five most burdensome states for professional licensing requirements. According to a White House study on occupational licensing, conducted in 2015, 22.3 percent of Arizona’s workforce is licensed, more than all but 19 other states.

“It’s an unpleasant surprise, and we certainly have found it in our attempts to fix this or improve it,” Ducey said of Arizona’s regulatory burden. “But we think there’s a lot of low-hanging fruit there and there’s a lot of opportunity to really change the situation, and we’re going to continue to focus on that.”

The Institute for Justice study was based on licensing requirements for 102 middle-income professions. Paul Avelar, an attorney with the Institute for Justice, said Arizona ranks as one of the most burdensome states for professional licensing largely because of the way it licenses contractors in the construction industry.

It was on professional licensing that Ducey made one of his most significant moves. HB2613, a bill his administration pushed during the 2016 legislative session, scrapped licensing requirements for assayers, citrus fruit packers, driver training school instructors, yoga instructors and some cremationists. The bill eliminated licensing requirements for geologists, but still allows them to obtain licenses if they wish. A separate bill nixed licensing requirements for talent agents, fulfilling a pledge Ducey made in his 2016 State of the State address.

Ducey said he plans to continue eliminating licensing requirements in future legislative sessions.

“We did make some headway with licensing. There’s a lot more to do. Arizona just has too many licenses for too many jobs,” he said. “Things like yoga instructors and talent agents just do not need a license. So we’re going to stay aggressive in reform there, on all those fronts.”

Avelar said Arizona is improving its regulatory climate, and HB2613 is a big part of that. But there’s a lot more to do.

“We’re looking forward to pushing for further changes this upcoming term,” he said.

Criticism and resistance

Significant parts of Ducey’s deregulatory agenda have met with serious criticism and resistance. Many opponents lament that the some of the policies he pursues undermine local control by municipal governments. Others say he’s pursuing deregulation as a conservative mantra without regard for whether regulations are needed to protect public health and safety.

Rep. Bruce Wheeler, D-Tucson, said some of Ducey’s deregulation efforts have been a good thing, and noted that he’s voted for some of them. But Ducey has probably gone too far in his quest for deregulation, he said.

“That’s the right-wing mantra that they don’t want to be regulated by anything or anybody, which is what always gets us in trouble. And I think it’s unfortunate,” Wheeler said.

Of Ducey’s deregulation efforts, at least on the legislative side – some have come via executive order – few have aroused more opposition than the occupational licensing bill.

The original version of HB2613 would have eliminated licensing requirements for landscape architects, geologists, athletic trainers and all cremationists. But in the face of opposition, often from within the industries themselves, the administration agreed to remove those professions from the bill. Geologists remained part of the legislation, but Ducey made licenses optional to ensure that Arizona geologists could still work in other states that require licensure.

Some critics are concerned about Ducey’s professional licensure efforts, and are wary of what his next steps will be. Steve Judge, an architect who serves as executive director of the Strategic Architectural Alliance Group of Arizona, was a vocal critic of HB2613. Though the bill did not include architects, Judge was fiercely critical of the concept behind the legislation

Judge said he generally opposes eliminating licenses for state-regulated professions, especially where the safety, health or welfare of the public is concerned. Licensure is tied directly to education, he said, and represents a bare-bones minimum of the requirements needed to do a job.

“From there, once you’re in that profession, you can choose to sit at the benchmark and only do the minimum, or you can excel. And that’s where the free market is going to dictate who’s busy, who’s not busy. But the same rights and responsibilities and privileges of using the title and practicing should not be given to anybody who’s not licensed. No way,” Judge said.

Judge said he’s concerned about how far Ducey will go in scrapping licensing requirements.

“It was kind of setting the tone,” he said of HB2613. “It was almost like testing the waters – let’s see what happens with this bill and then we’ll know what to do next session and the session after that, and we’ll just keep chipping away at it.”

‘Like termites in the woodwork’

When Ducey talks about deregulation, he and his staff often fixate on the 200-plus boards and commissions that govern and regulate various industries throughout the state. And with varying degrees of success, he has repeatedly sought to clip their wings.

In 2015, Ducey quietly slipped an amendment into a bill that allows him to fire the members of boards and commissions, many of which are responsible for enacting and enforcing professional regulations, even if the member have fixed terms. An executive order in June prohibited state entities, including those regulatory boards, from hiring contract lobbyists.

Other efforts on that front haven’t been so successful. A Ducey administration bill that would have eliminated a handful of boards and commissions passed the House in 2016 but never got a hearing in the Senate. And HB2501, which would have given the Arizona Department of Health Services director the authority to approve or reject regulations enacted by 19 health industry boards, was withdrawn by the Ninth Floor in the face of opposition from key GOP lawmakers.

“It’s like termites in the woodwork,” Ducey said. “With 220 boards and commissions, rules get passed and folks try to justify their positions. Certainly larger companies try to protect their turf and use the system to eliminate or reduce competition to set themselves up for success but not allow the open door or open market that they once enjoyed.”

Much of Ducey’s deregulatory agenda has revolved around the “sharing economy.” The former Cold Stone Creamery CEO is particularly fond of innovative and disruptive business models. And Ducey has made it his goal to make the sharing economy to Arizona what Silicon Valley is to California and oil is to Texas.

Ducey championed ride-hailing services such as Uber and Lyft, signing a bill aimed at reducing restrictions on them and even attributing his firing of the former director of the Arizona Department of Weights and Measures – he later disbanded that agency – for alleged overenthusiasm for cracking down on such industries. He signed legislation ensuring that municipal governments can’t restrict home-rental businesses like Airbnb. And one bill enacts a general prohibition on local governments putting new restrictions on sharing-economy businesses.

Some of the deregulatory licensing that Ducey has promoted or signed was met with broad bipartisan support, especially initiatives aimed at promoting the sharing economy. Many of those bills received near-unanimous support in the Legislature from Republicans and Democrats alike, including measures aimed at deregulating ride-hailing services, blood testing services, Airbnb and microbreweries.

Others have met with far more resistance. The occupational licensing bill passed on a party line vote, as did the legislation barring cities from restricting sharing-economy businesses. Ducey’s bill to give the health services director oversight on health profession boards, which also would have moved 19 boards and commissions under the agency’s roof, was primarily a victim of intraparty opposition.