Small business is the heart of Texas’ economy. Overregulation is the heart attack

Small businesses are the foundation of Texas’ economic success. That’s why we’re glad to see Gov. Greg Abbott starting a new initiative to make our state even friendlier to them.

The governor last week announced the launch of the Small Business Freedom Council and called on state agency heads to identify areas where overly burdensome rules, fees and regulations can be pruned.

State agencies have until Jan. 13 to submit their reports, giving lawmakers time to carefully consider the information and act during the 89th Legislature.

Some regulations, like health and safety codes, shouldn’t go anywhere. Those are important. But bureaucracies often bloat, and when they do, the impact is felt disproportionately by small businesses with limited resources.

To address that impact, state law requires agencies to consider the adverse effects new or revised regulation could have on Texas’ small businesses.

Take this example from a 2023 research paper from the McNair Center for Entrepreneurship and Economic Growth and Rice University’s Baker Institute for Public Policy.

It details a case study of the Texas Alcoholic Beverage Commission’s regulatory process. The findings suggest that the process “is not effective in practice.” Researchers identified several costs the commission overlooked, such as “paperwork hours” required to compile and submit applications, reports or notices.

That could be a focus area for the Legislature and the Small Business Freedom Council. Having a robust process to curb excessive regulation in the first place is better than trimming it back after the economic damage is done.

In January, Fort Worth restaurateur Regina Smith wrote about opening her own small business. At the time, opening a Fort Worth restaurant required owners to fill out 18 forms, work with nine agencies, complete eight in-person processes and pay 21 fees totaling $4,250. That adds up to 63 regulatory steps just to open the doors.

Some of that comes down to municipal regulation, which may not be an area of consideration for the Small Business Freedom Council. But the point stands; there’s room to strike a better balance.

Some regulation is needed to keep standards high and residents safe. But aspiring small-business owners shouldn’t need to get an honorary degree in business regulation or spend thousands of dollars to hire an expert just to navigate the legal framework.

Texas’ economy is the eighth largest when compared to the world’s nations, according to the governor’s office.

The state calculates that 99.8% of Texas’ 3.1 million businesses are small. Taken together, these businesses employ 4.9 million people or about 45% of the private workforce, according to the Texas Economic Development Corporation.

We already have a vibrant small-business scene here in Texas, but that’s no reason it can’t improve.

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