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August 1, 2014

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DAILY MEMO: OVERSIGHT:

Laissez-faire loses luster

Public begins to shed distaste for regulation, but can Nevada afford more of it?

Two years ago, as Gov. Jim Gibbons prepared to move into the Governor’s Mansion, his thoughts about government followed Republican political canon.

“Some people think that government is always the answer to the problem,” Gibbons told the Reno Gazette-Journal. “In my view, big government is the problem.”

It was hardly a controversial stance in a state that has famously stood for minimal government. (Hint: Not all state legislatures meet just once every two years).

But by the time Republican vice presidential candidate Sarah Palin uttered the same line — “government is the problem” — in Reno last month, the sentiment had grown more complicated.

In the past two years, the concept of a smaller role for government in regulating business has come under tough scrutiny.

Nationally, the foreclosure crisis and national banking meltdown have been traced in part to federal deregulation of the banking industry. Now even ardent deregulators, including John McCain, are joining Democrats in calling for more regulation of Wall Street.

Nevada, too, is seeing a shift after such well-known episodes as medical clinics that for years were not properly inspected even as they reused syringes, and weak state safety enforcement at construction sites and casino properties after fatalities.

Those events have been traced in part to a breakdown in government oversight. Democratic and Republican legislators alike have vowed to address that in the 2009 legislative session.

The potential fallout is very much on the minds of lobbyists and policymakers as they approach the session, Republicans say.

“I hear a lot of people in the lobbying world talking about how they’re on the lookout for regulatory committees to crank it up,” said Republican consultant Robert Uithoven. “Some of the industries that have been able to escape tough scrutiny are going to have their eyes wide open in the session.”

Uithoven expects that to be particularly true for businesses in sectors that have received the bulk of public attention — financial services, housing, construction and health.

State Sen. Randolph Townsend, Republican chairman of the Commerce and Labor Committee, said he has asked the governor to approve emergency regulation to increase staffing and regulatory activity in mortgage lending and financial oversight.

“I think there’s definitely a shift,” Townsend said. “I think there is a national movement toward more appropriate regulation. There’s an awful lot of laws in the book that don’t need to change. We just need to implement the ones that are there.”

But doing so takes more than political will. It requires money. Finding more of it to pay for more regulators will be tricky — some say impossible — given Nevada’s budget woes.

The staff of the state labor commissioner’s office, for example, which oversees wage and hour disputes, prevailing wages on construction sites and the state’s apprenticeship programs, has not increased since 1999. Employment in Nevada has increased 30 percent in that period.

Now that office is being asked to cut more, and may simply do away with its apprenticeship oversight.

The commissioner is also examining an alternative: making apprenticeship programs pay for the oversight. Expect to see more ideas like that. You pay for your own regulation.

Townsend said he plans to tell business groups, “ ‘Ladies and gentlemen, here are the challenges and here are the resources and here’s the problem. We’ve tried to redirect money, but at the end of the day we’re going to need additional solutions, and the revenue has to come from you.’ ”

The question will be whether the shift toward regulation has gone far enough to produce the response Townsend wants — and whether Gibbons will support it. His office did not respond to questions for this story.

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