Institute for Justice urges Austin to loosen home-based rules, propose phased fee cuts to help small businesses

Representatives from the Institute for Justice (IJ) briefed the Economic Opportunity Committee on March 20 about their November 2025 Small Business Insights and Policy Recommendations report and urged reforms to reduce barriers for entrepreneurs.

IJ presenters said their analysis of Austin found the city's online resources meet only two of five "one-stop shop" criteria, and they described starting a restaurant in Austin as among the most regulatory complex cases the group has studied. "Austin has so much going for it, especially our local businesses," presenter Ava Mouton Johnston said, adding that complexity and unclear back-office processes cause entrepreneurs to "die under the weight of bureaucracy."

IJ proposed three priority reforms: legalize reasonable low-impact home-based businesses (noting state preemption under HB 2464), adopt an Emerging Business Fee Reduction Act to phase in licensing fees over several years for eligible under-resourced startups (IJ described a schedule beginning at 0% in year one then 25%, 50%, 75% and full fees by year five), and pass a "spring cleaning" ordinance to empower staff to remove or streamline outdated regulations.

The presenters cited examples from Seattle, Raleigh and Chicago where loosening signage and special-permit rules or cutting business types reduced barriers and, in some cases, increased long-term revenue. They also recommended improving Austin website usability to provide a true one-stop portal for entrepreneurs.

Council members expressed interest in the proposals and in related items coming to council next week. Councilmember Mike Siegel thanked the presenters and noted that council agenda items, including a local commerce initiative, could dovetail with IJ's recommendations.

IJ's presentation did not request specific council action at the March 20 meeting; presenters indicated they would continue working with city staff and councilmembers on policy details.