Reengineer Business Permitting in Texas

State law should require the Texas Department of Commerce (or the successor Commission on Commerce and Labor recommended elsewhere in this report) to reengineer the business permitting process in Texas.

New businesses often consider obtaining permits and licenses in Texas a major problem and a large bureaucratic obstacle. More than 230 separate business/environmental/manufacturing/commercial permits and licenses exist for Texas businesses. Not every permi t or license applies to every business; however, deciphering which ones do apply is tricky since they are adminis tered by more than 40 different state entities. The system, or lack of one, lends itself to inefficiency and hassle for the applicant. This does not encourage business expansion in Texas and is not customer-friendly.

The Texas Department of Commerce (TDOC) currently is responsible for commerce and industrial development in Texas, and its duties include helping Texas businesses obtain permits and licenses. TDOC has been charged with recommending elimination, consolidati on, simplification, expedition or other improvements to the permitting and licensing procedures. 1 At present, though, the TDOC Office of Regulatory Assistance is essentially a source of information. The state does not have a central location for obtaining basic business permits.

TDOC has made improvements in the state permitting process by implementing the Regulatory Assistance Program. Publication of A Guide to Texas Business Licenses and Permits is one way that the agency attempts to organize the permitting and licensing process. 2 It al so implemented a comprehensive permit application in which the applicant completes a form, providing necessary information for determining what permits may be needed. TDOC then notifies the agencies with possible permit jurisdiction. The agencies have 25 d ays to inform TDOC whether or not a permit from their office is required. Depending on the response, TDOC then provides applications for the appropriate permits to the applicant. Although these activities have helped start-up businesses in Texas, more cons olidation is possible to create a simple, customer-friendly permitting system that encourages business development in Texas.

Other states have permit assistance programs. One example is New York s State Office of Business Permit and Regulatory Assistance. The office not only offers permit assistance, but has two regulatory review and reform programs. The review program examines pending regulatory legislation and rules to determine if they are written clearly, if the regulation is fair, if it duplicates e xisting regulation and if it is authorized by law. The reform program examines current regulation to determine its effect on businesses and if the regulation is necessary.

The staff reviews the permit issuing reports of all regulatory agencies. Sometimes they have found permits that have not been issued in years. These permits are examined to determine if they are still needed and what needs to change if they are retained. T he office also reviews fees to be sure that they mutually benefit the state and industries. This office s functions are subject to sunset review every three years to assure that regulations are being streamlined.

The business permitting process should be reengineered to move toward the goal of creating a one-stop permitting process. This should be the responsibility of the Texas Department of Commerce (TDOC) (or Commerce and Labor, proposed successor to TDOC, recom mended elsewhere in this report).

The agency should review the state s business permitting process to i dentify duplication, shorten cycle times, reduce paper flow and improve customer service. Strengthening the statute in this area would allow the agency to more responsibly complete its mandate, the goal of which should be to move the state towards a one-stop permitting process. The agency should consult with business groups for customer feedback. Additionally, the agency should work with other agencies involved in permitting to coordinate the review. The statute should require agencies to cooperate in bot h the reengineering and implementation of improvements. Additionally, the statute should require reports on the reengineering effort. Any non-statutory improvements should be completed by September 1, 1994. The agency should be required to present any reco mmended statutory changes to the 74th Legislature by January 1, 1995.

TDOC currently has a computer information and referral network called the Texas Marketplace. This system provides information on a user-friendly, menu-driven data retrieval system. Th e computer can be accessed by businesses through a modem and their own computer or by going to one of more than 50 Small Business Development Centers located in Texas. This could be one vehicle for providing one-stop permit information to locations outside of Austin.

TDOC already has the authority to recommend changes to permit procedures. A reengineering project with the cooperation of other agencies would result in an improved and streamlined permit application process. This improved cu stomer service will result in easier business startups and will encourage economic development in Texas.

Fiscal Impact
There is no fiscal impact as a result of this recommendation.

1 Tex. Gov. Code Ann. Sec. 481.123 (Vernon 1989).
2 Texas Department of Commerce, A Guide to Texas Business Licenses and Permits (Austin, Texas, June 1992).