By Stephen Smoot
In this year’s rankings, West Virginia has moved to 41st, placing it in the top ten percent of states. This ranking service, known as the Red Tape Index, ranks each state, plus Puerto Rico and the nation’s 100 largest cities, in terms of important factors of state and local government.
West Virginia has also moved upward to a C+, a slight improvement from the previous C grade. This places the Mountain State on par with Indiana and Iowa.
The Red Tape Index measures government effectiveness in five categories. These include how quickly one can start a business in each area, how hard it is to hire people, labor, population and migration trends, government friendliness, and how easy it is to receive permits. In terms of most important priority, the efficiency of permitting is the most important factor in the survey’s eyes.
The rankings update every three months. For this update, they noted that, “Fourteen states decreased the time it took to start a business,” and West Virginia was one of them. For this forward from 31 to 33.
The index draws on information from artificial intelligence, government agencies, and also its own team. For the first two years, this index has published information for every county and the 100 largest cities in the United States.
This company has crafted programs that can compare and contrast different aspects of government permitting from state to state and county to county.
Legal counsel Amy Lacy explained that “it’s not just a snapshot. It typically works as a consultant with economic development agencies and also cities.”
Stuart Lacey, Chief Executive Officer for the Red Tape Index, explained how this service benefits both those in and out of government. “We’re talking about is how difficult it is for anyone to interact with the government,” he explained. The index measures how easy and quick it is to start a business, how the government can help both private sector and also charitable organizations “to be more successful, to create better economic and environmental outcomes,” and also to make the process easier for people and organizations to function.
Lacy explained that until the advent of AI technology, this analysis was all but impossible to collect for smaller areas. Businesses and other organizations simply relied on word of mouth about “hottest place, the cool place to be,” or similar subjective measures. “You could call and talk to a few people” at a state or local level to get an idea of where to place new operations.
The Red Tape Index, by contrast, gives access to places where modern tools pull available data and make reports.
Lacey said that “the Red Tape Index is not just taking surveys.” Instead, they have “gone through the process of 175 datasets from ‘publicly available but not easily usable’ sources.” These include, for example, permitting data, market economic data, and employment data.
“The AI has taught itself to understand this data.” For instance, in the initial publication of state data, City Manager Kim Fenner stated that the City of Parsons was in touch with the company. The city shared with them their engagement in these fields and how the company could work with the city to their mutual benefit.
During his campaign for Governor last year, Jim Justice pledged to “cut the red tape” that often stifles small business growth. The state has already made progress in several other business-related metrics. For example, Site Selection Magazine has awarded the state with the Governor’s Cup, and has been in the top ten nationally for a number of years.
Lacy also said that states that have achieved 11th place, Ohio 18th, Pennsylvania 24th, Maryland 37th, and Virginia 44th, have done so for a variety of reasons.
She also pointed out that West Virginia was “the first to pass an occupational licensing reform,” to address the “notoriously inefficient New York and California.”
She added that “West Virginia is actually doing fairly well. It’s performing very well in land use at the state level.” This is especially important for the Mountain State as it allows for the development of its natural resources. She also said that “it needs to improve in the other three categories respectively.”
The Mountain State falls behind in population growth and the state’s labor force. Lacey explained that “population is an important factor. That said, the biggest factor is creating jobs and opportunities for those people to be successful, to move to the state and to stay.”
The Executive Order one from Governor Jim Justice, called “Operation Jumpstart,” created a task force for West Virginia’s workforce. The order read “various factors have combined to create obstacles that prevent our state from realizing its full workforce potential.” The order cites “our people’s ability to live, learn, work, and play within the State.” It continues, “this Executive Order directs agencies to identify and remove, to the extent permitted by law, any policies, rules, or regulations that act as barriers to a successful career and development of entrepreneurs.”
The Red Tape Index website, at redtapeindex.com, states “each state’s regulatory efficiency is rated from A to F,” with a list of the top ten states in their respective categories. Interestingly, Massachusetts has a score of 89.2 and the state with the lowest score, California, is only 1.2 points behind, with a score of 88.0. Other states like Kentucky at 50, New Jersey at 48, and North Dakota at 35 have similar scores. A state’s good score in one category would, however, attract outside business and other investment. The state’s economic development agency would be interested in this data as it could potentially attract businesses from other fields.
