LOUISVILLE, Ky. (WDRB) -- For the owners of Taxi 7, establishing a new cab service in Louisville was not merely a matter raising $3 million, setting up a service garage and equipping 100 hybrid-electric vehicles with credit card readers and other technology.

Before it could start operating, Taxi 7 also had to contend with a months-long challenge in 2014 from a bigger, entrenched competitor – Yellow Cab of Louisville – which argued that the city did not need another cab company and that Taxi 7 was not equipped to provide the service.

To overcome the challenge, Taxi 7 produced a 14-page “need and necessity analysis” that cited data on Louisville’s population growth, hotel development and job trends, while gathering letters of support and sworn statements from 39 people, according to documents obtained in a public records request.

Among those who vouched for the benefits of having another cab company were Kent Oyler, the CEO of Louisville’s chamber of commerce; Karen Williams, the CEO of the Louisville Convention & Visitors Bureau; and local developer Gill Holland.

Taxi 7 ended up getting the go-ahead to enter the Louisville market – where it remains in business and expects to grow -- thanks to the approval of a state employee within the Department of Vehicle Regulation at the Kentucky Transportation Cabinet.

A cab service entering Louisville today would face fewer road blocks – the result of a 2014 federal judge’s ruling that prompted the state legislature to change regulations in 2016.

But Taxi 7’s experience nonetheless illustrates the kind of barriers to business and employment that a state lawmaker from Louisville wants to highlight and possibly eliminate.

Under a bill sponsored by state Rep. Jason Nemes, a Republican who represents the Middletown area, dozens of state agencies and boards that grant permission for people to open businesses in certain areas – and for workers to practice certain professions – would have to regularly review and justify their requirements to the legislature.

The bill would also make it easier for prospective workers and business owners to challenge the rules. Agencies would have to explain any rule in writing upon request, and the bill creates a path to appeal disputes to Circuit Court judges.

Nemes, an attorney, said the goal is to make sure regulations on businesses and professions – from doctors to electricians to social workers – are necessary for the safety of Kentucky consumers and not simply a barrier for competitors to set up shop.

“When somebody wants to come into the workforce, they should have as unfettered of an ability to get in the workforce as possible, consistent with safety,” he said, adding that he is not against licensing in general.

Nemes said he thinks the bill has good chance of advancing in the legislative session that begins Tuesday despite higher-priority items like pension reform and the crafting of the state’s next two-year budget.

Moving, hair-braiding cases prompted bill

Kentucky regulates more than 300 forms of business and professions across various departments of state government, according to the state’s One Stop business portal.

While all states have rules for who can be a truck driver, emergency medical technician or cosmetologist, a bigger share of the workforce in Kentucky is subject to license requirements than most other states, according to a 2015 paper by the Hamilton Project, a unit of the Brookings Institution, a Washington, D.C. think tank.

The paper, drawing on a 2013 nationwide survey, found that nearly 28 percent of the workforce in Kentucky is licensed, a higher share than all other states except Iowa, Nevada, Washington and Florida. Only 15 percent of Indiana’s workforce, by comparison, is licensed, according to the paper.

Among the occupations that Kentucky regulates are art therapists, people who conduct auctions, pastoral counselors, nail technicians and workers who help customers fit eyeglasses.

While he thinks the state requires licenses for “too many” types of businesses and professionals, Nemes declined to name any that he thinks should be eliminated.

The bill aims to highlight needless rules by requiring boards and agencies to justify their requirements at least every seven years, he said. (The bill says every five years, but Nemes said the language will be tweaked).

“Our licensing schemes sometimes make sense, and then over the course of years, (they) no longer make sense,” he said.

Nemes said the effort was prompted by a pair of recent cases that show how the state can overreach.

For years, moving companies who sought licenses from the state Transportation Cabinet had to first alert existing moving companies, who were allowed to protest and almost always succeeded in convincing the state bureaucracy not to give the new company permission to operate, according to the opinion by U.S. District Judge Danny Reeves, of Frankfort.

The challenge by Lexington-based Wildcat Moving LLC ended up removing what the judge called a “competitor’s veto” and helping Taxi 7 overcome Yellow Cab’s challenge at the end of 2014.

Proponents said natural hair braiding posed no safety risks that would justify requiring the same license necessary for those who cut and wash hair in salons.

Nemes noted that free-market conservatives aren’t the only ones bringing more scrutiny to occupational regulations. The Obama administration also encouraged states to look at unnecessary rules surrounding jobs. 

“There is definitely a push nationally to more comprehensively loosen these things,” said Jason Bailey, director of the progressive Kentucky Center for Economic Policy.

Meanwhile Bevin, a Republican, has issued executive orders to combine a number boards overseeing real estate professionals – agents, home inspectors, appraisers – and overseeing building trades, such as plumbing and HVAC.

His administration also removed “several unnecessary” regulations surrounding boxing and wrestling events as part of Bevin’s “Red Tape Reduction” initiative.

The Lexington Herald-Leader reported earlier this year that Bevin’s Public Protection Cabinet planned to restructure another 39 medical and professional boards overseeing everything from dentistry to accountants to architects, but the plan was delayed.

A spokeswoman for the Cabinet did not return a phone call and email about the status of the plan.

Experts warn against going too far

Bailey, of the Kentucky Center for Economic Policy, said it makes sense for the state to regularly review its rules, and Nemes’ bill could complement a criminal justice reform law passed earlier this year that prohibited board and agencies from automatically denying job licenses to people with felony convictions.

At the same time, Bailey said, “I don’t think the answer is to get rid of all (occupational licenses) and have a Wild West where you can put up a shingle and say that you are qualified to provide service.”

Tom Underwood, Kentucky director for the National Federation of Independent Business, the small business lobby, said his group is “always on the side of cutting red tape and bureaucracy.”

But, “many of these regulations are there to ensure safety and that we’ve got competent people working, so we don’t want to go too far to open things all the way up,” he said.

Justin “Jay” Miller, chairman of the Kentucky Board of Social Work, said he has no problem with Nemes’ bill since his board continually reviews and updates its requirements that ensure “only qualified people” practice social work in the state.

“I think it codifies a lot of what we do anyway,” said Miller, an assistant professor at the University of Kentucky.

Miller added that licensed social workers aren’t putting up road blocks to keep others out of the profession. In fact, “there are huge swaths of the state that need more social workers,” and the board is trying to get more people into the job, he said.

One area in which the state tightly regulates new businesses – healthcare – likely won’t be touched by Nemes’ bill.

The state requires “certificates of need” for new healthcare facilities such as hospitals, nursing homes and even primary-care clinics in grocery stores.

Nemes said he will remove a line in the bill that would subject “certificate of need” rules to the periodic review and challenge process created for other regulations.

The Kentucky Hospital Association, which represents 127 hospitals throughout the state, opposes subjecting the rules surrounding new healthcare services to further review, as they are already evaluated “thoroughly” as part of the state’s biennial health plan, said Michael Rust, the president of the hospital association.

Applying Nemes’ bill to certificates of need would “add red tape,” he said.

Nemes said the boards overseeing healthcare professionals will still be subject to his bill.

While no one thinks Kentucky shouldn’t license doctors and nurses, he said, regulations could be tweaked to allow more tele-medicine or other medical innovations.

Reach reporter Chris Otts at 502-585-0822, cotts@wdrb.com, on Twitter or on Facebook. Copyright 2017 WDRB News. All rights reserved.