Gov. Jared Polis is, among other things, the state’s cheerleader-in chief, and, to his credit, he does a pretty good of that, boosting the state on the national stage every chance he gets. But despite his assurances of strength of Colorado’s economy (which are increasingly sounding more like a desperate boxing manager trying to convince reporters the Champ is just fine, not reeling from a devastating beating he took and how dare you even suggest that — rather like the Biden administrations assurances of the acuity of the president in the months leading up to his withdrawal, come to think of it) to everyone else, that economy is noticeably slowing its pace, breathing heavier and showing the signs of strain and fatigue. A recent study commissioned by the Colorado Chamber of Commerce shows us why.

The Regulatory Impact Analysis Report, compiled by the StratACUMEN Group for the Chamber, undertakes the exhaustive task of examining Colorado’s regulatory landscape and quantifying its effects on the economy. Here are the major dimensions of what it found:

• Colorado is the sixth-most heavily-regulated state in the nation, with nearly 200,000 regulations imposed on businesses, 45% of which are deemed excessive compared to other states;
• The number of new business regulations in the state grew by 7.1% between 2020 and 2023;
• For every 10% increase in the number of industry-specific regulations, there is a corresponding 0.5% decrease in the number of firms, and a 0.6% decrease in small-business employment. This translates to 9,000 fewer firms and 36,000 fewer jobs.
• Excessive regulation slows economic growth and productivity by about 1% to 2%, and increases costs to consumers by roughly 1% per year.

Not all regulations can or should be contemplated homogenously, but what the study illustrates is the sheer number of regulations is a reliable index of the extent to which an economy is held back. And this is not even considering the additional hampering effect of federal regulations, which the report helpfully points out would, if included, bring the number of regulations Colorado’s economy must contend with to 1.3 million. In 1985, the Federal Register, which catalogues new regulations each year, was 41,000 pages. The 2023 edition logged 90,402 pages of new federal rules. And for additional context, federal regulations increased only by about 1.3% during the same 2020-2023 time period when Colorado’s regulations increased by 7.1%.

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It is worth pondering how we got here. The answer, of course, is consecutive legislatures intoxicated by the lure of the functionality of the state to address every issue that came up. The political figure who believes in the strength of that functionality can find no end of reasons to flex the altruistic muscles of the state. But eventually the cumulative weight generated by all that flexing has an inevitable economic cost.

The sheer volume of regulations starts to present other problems as well. One of these is the enthusiasm for government regulation starts to bump up against other idealistic visions. A prime example of this is housing. Some have determined, for instance, the use of natural gas for heating and other uses is offensive to ecology; so let’s ban the use of gas appliances and the installation of gas lines to new developments, right? But that drives up the cost of those new developments, which further depletes the state’s inventory of housing. Ergo for all of the other plethora of green building regulations. On a similar note, Xcel energy reports the regulations driving the increase in electric vehicles and heat pumps will require utility customers to fork over an additional $5 billion to build the electric infrastructure needed to meet the new, artificially created demand, which Xcel says is the highest spike since the advent of air conditioning.

So what is to be done? What is needed is trenchantly described in the Chamber report — the Chamber is calling for a series of wise reforms; among them a regular review process for newly minted regulations, similar to what is currently being done for tax expenditures, to determine if a given regulation is doing what it is supposed to, is still needed, and so forth. Secondly, regular audits of all state agencies; and finally, a cap on new regulations, applying in effect the Hippocratic oath to an economic function — first do no harm. Or to out it in the vernacular, if you find yourself in a hole, the first thing to do is stop digging.

Kelly Sloan is a political and public affairs consultant and a recovering journalist based in Denver.