Arkansas has a sunset review process for occupational licenses. But what has the process produced?
Before the Arkansas Center for Research in Economics (ACRE) suggested a list of questions for the committee, meetings often didn't contain much useful information. On Jan. 27, the Occupational Licensing Review Subcommittee of the Legislature met to review occupational licenses handled by the Arkansas Contractors Licensing Board, the Arkansas Psychology Board, and the Arkansas Elevator Safety Commission.
Occupational licensing refers to government regulations, usually at the state level, that limit entry into particular occupations. These regulations can take the form of education and experience requirements, license fees, and apprenticeships, among other things. Some licenses require their holders to pay annual or biannual fees to maintain their licenses. Most people are familiar with some professions that require licensure, such as doctors and lawyers. However, many other jobs require a license. This varies by state and includes over 250 such jobs in Arkansas. For example, massage therapists, makeup artists, and auctioneers all must have a license in Arkansas.
In 2019, the Legislature passed Act 600, which mandated sunset reviews for every occupational license in the state. The act makes it clear that occupational licensing in Arkansas is to be "the least restrictive form of occupational authorization to protect consumers from significant and substantiated harms to public health and safety."
This process of reviewing occupational licenses and determining if they should be "sunset" can potentially benefit Arkansans in a couple of key ways. First, reforming licenses can lower barriers to good jobs for many low- and middle-income citizens. Second, sunset review processes have proven to be a worthwhile investment in other states. Texas' sunset review process, started in 1985, has had an estimated positive impact of $1 billion in terms of taxpayer savings and revenue gains as of 2019.
The Occupational Licensing Review Subcommittee is a joint House and Senate committee tasked with evaluating Arkansas' licenses on the terms of Act 600. At committee meetings, members of licensing boards present information about their respective licenses to the joint committee. Between legislative sessions, the committee reviews approximately one-third of all occupational licenses in the state. Before the next legislative session in 2023, the committee will make its official recommendations about licensing laws and rules that should be changed based on their findings in the interim.
At ACRE, we are working to understand how occupational licensing can be used more effectively, with the aim of increasing job opportunities for low- and middle-income earners in the state.
Sen. Alan Clark (R-Lonsdale), co-chair of the Occupational Licensing Review Subcommittee, moved to adopt an ACRE-authored questionnaire as the official question list for licensing board representatives to answer during committee meetings.
There are several principal benefits from this outcome. Previously, licensing board representatives had to guess which information would be important for legislators serving on the committee to hear. Some board representatives would arrive at the meetings with little to no information to present, and would simply take whatever questions legislators had.
The ACRE questionnaire improves discussions in the committee meetings by posing questions such as: "Would consumers be at risk of substantial harm if we did not have this license?" and "Were any applicants who otherwise met licensing requirements denied a license in the past year?" and "Could licensing fees be reduced without causing the board to be underfunded?"
It is important that board representatives come prepared to answer questions like these so legislators can make well-informed decisions when the committee makes its official recommendations later this year.
Senator Clark asked questions from the ACRE questionnaire when interviewing representatives of the Arkansas Contractors Licensing Board about contractor licensing in the state. Past meetings of the subcommittee were often light on detailed information about a given license. However, with ACRE's questionnaire, much more detailed information about contractor licensing was discussed, giving legislators a much clearer picture of the landscape of contractor licensing in Arkansas.
Occupational licenses cover a wide range of professions, and it is impossible for legislators to be aware of the particularities of every licensed occupation. Now with ACRE's questionnaire, legislators will have a list of baseline questions to ask in addition to any other questions they may have. Board representatives will also be solidly prepared with information that explains the value of their respective licenses.
ACRE will continue to work with legislators on the subcommittee and develop even better questions and criteria for licensing review. With their adoption of the official questionnaire, committee co-chairs Clark and Rep. Frances Cavenaugh (R-Walnut Ridge) have taken a significant step toward improving the sunset review process in Arkansas.
By building and maintaining a strong relationship with the legislators on the committee, we can work together to improve the state of professional licensing in Arkansas.
Zachary Burt is a policy analyst with the Arkansas Center for Research in Economics. His research at ACRE involves occupational licensing and property rights.