A recent report says less government red tape accelerates economic growth, but Pennsylvania seemingly stands in its own way.
Since taking office, Gov. Josh Shapiro has taken steps toward spurring economic growth and streamlining processes, such as removing the college degree requirement for state jobs. Even so, an analysis by the Commonwealth Foundation, a policy group that supports fiscal conservancy, says Pennsylvania is 22% more regulated than other states on average.
The report, “Cutting Red Tape in Pennsylvania” says there are 166,219 regulatory restrictions in the Pennsylvania Code, placing it the 12th most regulated state in the nation, and second in the Mideast region.
The average state enforces 136,262 regulatory restrictions. However, there is wide variation among them – Idaho has just 36,612 while California, the heaviest regulated, has 403,774.
The largest number of restrictions – over 33,000 – are related to environmental protection and natural resources.
The top three regulated industries in the state are listed as paper manufacturing, chemical manufacturing, and waste management – with an average of 3,700 regulations each.
Another area needing to be addressed, according to the report, is permitting reform. Although governors from both political parties in recent years have prioritized the issue, the process remains arduous for the energy industry.
Efforts by the former Corbett and Wolf administrations were “somewhat successful,” the foundation says, in reducing the time the Department of Environmental Protection took to review and approve well and surface permits. Additionally, Gov. Josh Shapiro signed an executive order guaranteeing a refund of fees if a state agency fails to review permits within an established time frame.
Problems persist, however, and the organization says it has tracked application decisions – expected to take two to six weeks to complete – that have taken 250 days or more. This may stem from loopholes in the DEP’s Permit Decision Guarantee policy, they say.
Overregulation can have widespread impacts on an economy. According to U.S. Census Bureau data, from 2010 to 2020, states, on average, saw a 7.4% population growth while Pennsylvania’s was only 2.4%.
Academic evidence suggests “reducing regulatory burdens can substantially increase GDP growth and therefore human welfare,” according to the foundation.
There are a number of regulatory streamlining models policymakers can adopt to achieve faster growth, they said. “The question is whether policymakers are willing to take the necessary steps to free Pennsylvanians from the burdens of red tape.”
Their recommendations include considering a pay-as-you-go model, under which the state sets limits on the rules agencies can place on its residents. For example, in Texas, for every new regulation that imposes a positive cost, a state agency must identify and cut an equivalent amount of existing regulatory costs.
The report also cites several bills currently under consideration in the General Assembly that would allow for an online permit tracking system – similar to what pizza chain restaurants like Dominos uses – and require legislative approval for regulations with an economic impact in excess of $1 million.
Passing a constitutional amendment that allows the legislature to vote to overturn an economically significant regulation without the approval of the governor – similar to a provision stripped from Senate Bill 1 in early 2023 – would also improve the state’s economic standing, according to the foundation.
“Passing a constitutional amendment would allow the legislature to properly assert its authority to vote down regulations. Currently, the governor’s veto power neutralizes the General Assembly’s ability to disapprove of state regulations,” the foundation’s report says.
