For two years, Gov. Josh Shapiro has talked about the need for government to “move at the speed of business.” Though rhetoric is plentiful in Harrisburg, the governor has taken real action to address regulatory reform. Thus far, the Shapiro administration has inventoried all of Pennsylvania’s 2,400 plus permits, sped up processing times for occupational licenses, and — just this week — introduced a new “fast track” permitting program for selected projects.
However, Shapiro has also pursued destructive policies, like borrowing hundreds of millions for PA SITES, a program to woo big business — all while the Commonwealth faces a $4.7 billion deficit.
In 2021, PA lawmakers created the Local Resource Manufacturing (LRM) tax credit to attract businesses to the Keystone State. Shortly after, Nacero, a fuel-development company, announced its plan to build a plant in Luzerne County. At the time, politicians boasted the project would lead to thousands of construction jobs and 450 long-term, high-paying jobs.
Three years later, Nacero has yet to begin construction. Moreover, Nacero never claimed the LRM tax credit.
Nacero wasn’t alone. No company claimed an LRM tax credit despite Harrisburg upping the cap from $26.6 billion to $56.6 billion in 2023. Notably, four different PA tax credit programs recorded no applicants in 2023 and 2024.
Corporate handouts and tax credits don’t correlate with growth. Among the top 10 states for corporate giveaways in 2023, five, including PA, experienced net migration losses, according to the U.S. Census Bureau.
Meanwhile, PA continues to decline economically. Every year, the American Legislative Exchange Council (ALEC) rates economic performance by state. From 2019 to 2024, PA’s ranking fell nine spots as our corporate welfare spending increased by 38 percent.
Sadly, PA’s economy isn’t what attracts people and investment but rather what scares them away.
Last year, FairLife considered building a milk-processing plant in PA, about the same time lawmakers passed a $15 million annual milk-processing tax credit. However, PA’s notoriously slow permitting process inspired the company to choose New York instead.
To address the Commonwealth’s obtuse permitting, Shapiro signed the Streamlining Permits for Economic Expansion Development (SPEED) program into law. Though intended to expedite permitting, the program applies to only 6 percent of permits and requires extra fees for timely responses. Ultimately, SPEED falls short of the relief Pennsylvanians deserve.
Pennsylvania’s economy isn’t what attracts people and investment but rather what scares them away.
It’s a similar story for another kind of red tape: occupational licensing. In October, the governor eliminated the license for hair braiding. That’s a great first step, but there’s more low-hanging fruit, including the 12 other license eliminations proposed by former Gov. Tom Wolf and a strengthened reciprocity law.
Shapiro and state legislators have a golden opportunity to spur job creation if they focus on a different kind of ribbon-cutting: slashing red tape. With more than 164,000 regulations and rules, PA ranks as the 14th most-regulated state. Findings published by the Commonwealth Foundation show a 36 percent reduction in our regulatory restrictions could increase annual GDP by $9.2 billion and add 183,497 new jobs. But these gains only come to fruition when government pursues regulatory relief for all, not a select few like the governor’s new “fast track” order.
Shapiro clearly understands the benefit of regulatory relief. He accelerated permitting to rebuild I-95 and requested expedited approval of the Crane Clean Energy Center (i.e., Three Mile Island). But these were one-off situations, and Shapiro could do so much more. If state leaders are serious about competing with other states, it’s time to get serious about broad regulatory reforms.
The good news is many of these reforms already passed the PA Senate last session. Such reforms included annual legislative approval of regulations with an estimated economic impact of more than $1 million. Shapiro could also set a regulatory reduction commitment, empowering agencies to eliminate redundant, outdated, or harmful regulations to reach a set goal. Virginia and Ohio successfully achieved similar reforms in recent years.
The track record is clear: Bribing businesses with taxpayer handouts doesn’t work, but streamlining the bureaucracy does. Corporate welfare creates an uneven playing field that disadvantages small businesses without high-paid lobbyists or massive construction contracts. Meanwhile, cutting red tape creates jobs and lowers government costs — a win for everyone.
PA lawmakers must stop the handouts no one wants and pursue regulatory relief to help all employers, large or small, succeed. Only then can government move at the speed of all businesses.
Elizabeth Stelle is Director of Policy Analysis of the Commonwealth Foundation, Pennsylvania’s free-market think tank. X: @ElizabethBryan
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