Day 4: Eliminate Unnecessary Construction Licensing
The Construction Industries Division (CID) in New Mexico requires that any individual who is engaged in construction-related contracting must be licensed. This includes "general construction work, electrical, mechanical and plumbing and LP gas."1 Due to these current licensing requirements of the CID, construction-related projects are significantly more expensive to carry out, reaching levels as costly as an increase of 25 percent.2
Contractors who pursue construction-related contracting without obtaining a license risk being ineligible for licensure for one year. The CID can also suspend construction on the project.3 This prevalence of such barriers to entry varies greatly from state-to-state. In neighboring Oklahoma, construction contracting is almost entirely unlicensed.4 New Mexico would benefit greatly by abolishing the current onerous licensing system which would remove unnecessary cost burdens on contractors and provide incentives for individuals who would have otherwise pursued construction outside of the state, thus reducing construction costs in New Mexico.
The total abolition of the current CID licensing system is indeed a radical proposal, but one which should be seriously considered. In the absence of such a step, the CID should be restricted to simply approving initial construction plans and the final construction. This would allow construction to take place without the costly burden of unnecessary micromanaging by the CID.
Efforts such as the recent "electronic plan review system" which will allow businesses to submit their proposals online for a faster review process that will save both time and money are modest steps towards improving contractors’ ability to get to work.5 Much more is necessary in order to provide a free market environment for New Mexico’s contractors, and it begins with limiting the regulatory power of the CID.
1http://www.rld.state.nm.us/construction/
2October 31, 2011, interview with Harold Meyers who owns a small business in West Texas and Clayton, NM.
3Construction & Manufactured Housing: Overview, http://www.rld.state.nm.us/construction/
4http://www.contractors-license.org/ok/Oklahoma.html
5http://www.abqjournal.com/main/2012/07/24/biz/business-briefs-45.html