Do sunset laws create more waste than they cut?

While Congress grapples with a regulatory reform bill and the Reagan administration continues its drive to limit government rulemaking, some state lawmakers are having second thoughts about a popular method for dealing with their own bureaucratic red tape.

Sunset legislation - laws designed to abolish state agencies after a set period of time unless they are specifically renewed by the legislature - is being faulted for its expense and for creating more of what it is supposed to eliminate: regulations and paper work.

A spate of laws since 1976 has abolished boards regulating everything from barbers and shorthand court reporters in Colorado to alarm installers and an oceanographic foundation in landlocked Vermont. But, say critics, it wasn't worth the expense.

''It hasn't worked out the way we hoped it would,'' says John Chandler, a New Hampshire state senator who originally voted for the sunset law passed there in 1978. ''It sounds good on paper, and I still think the concept is a valid one, but in the last session it did more harm than good. We were so swamped with sunset requirements that we were not only sidetracked from regular business, but a lot of agencies ended up with rubber stamp renewals anyway.''

In the late 1970s, growing public disenchantment with big government, mounting budget deficits, and overregulation created a mood in state legislatures in which sunset legislation flourished. When the snowball stopped rolling, 35 states had such laws.

But the failure of sunset legislation to live up to its billing has resulted in repeal in North Carolina. Oklahoma and Arkansas will likely follow in the next session, and several other states are considering such action.

Sunset proponents argue that recent setbacks are no more than slight stumbles for a young program still gaining its footing.

''Sunset's expectations were oversold,'' says Holly Wagner of Common Cause. ''The process has now stabilized and expectations are more realistic. Legislatures have moved from some disillusionment to healthy refinement of the laws. They realized you can't just go in and cut waste out, though you can increase accountability.''

Others who viewed sunset legislation as a potential money-saver - rather than a process for streamlining government - have also been disillusioned as the cost of maintaining sunset offices has been shown to exceed the revenue saved from eliminating wasteful programs in many states.

What irks many legislators is that there aren't enough boards being eliminated. The blame is often laid to the mountain of data compiled during the review process.

Still, dissatisfaction with sunset is far from universal. A study on the status of sunset laws in the states by Common Cause earlier this year found that of the 1,500 agencies reviewed since 1976, almost one in five has been terminated, one in every three modified, and less than half re-created with little or no change.

While the study showed that half the states complained that the sunset process took too long, two-thirds of the states also reported increased efficiency within the agencies reviewed. The latter point - along with lengthening the cycle between reviews - may be the key to the future direction of sunset.