Streamlining State Government

Executive Summary

Across the nation, states are facing formidable fiscal challenges. In an effort to provide core government functions with fewer resources, a number of states are looking to streamline state government by consolidating departments, outsourcing services, and eliminating outdated, less useful, or under-performing agencies.

Three states, Michigan, Louisiana, and Virginia, have made significant efforts to streamline government. Michigan has identified seven core functions of government and started consolidating unnecessary state departments.  Louisiana has begun implementing more than 120 recommendations submitted by its Government Streamlining Panel. Virginia's commission made 133 recommendations and will continue to identify streamlining opportunities throughout the McDonnell administration.

The Keystone State should likewise look at streamlining efforts to trim the size of government and reduce the bureaucracy that inhibits economic growth.

Pennsylvania businesses must navigate a complex web of regulations from more than 340 independent state agencies, offices, state departments, boards, commissions, and committees stemming from the executive branch. Several other boards, committees, and commissions in state government primarily provide an advisory or public relations role, often with little to show for their work.

The expansion of regulatory bodies requires additional administrators and enforcement staff-paid for with higher taxes and fees. The number and complexity of state agencies, boards, and commissions impose indirect costs to residents and job creators, with untold costs to comply with the regulatory burden.  Pennsylvania must actively pursue every opportunity to trim state spending and the regulatory burden place on job creators by streamlining government, thus encouraging economic growth and prosperity.

This report looks at reforming Pennsylvania's state government agencies and regulatory process. The following pages outline the regulatory structure in state government and present three case studies comparing Pennsylvania regulations with other states in telecommunications, prevailing wage laws, and natural gas drilling. 

Telecommunication regulatory reforms include giving all telecommunication providers the same flexibility in pricing, eliminating rules regulating how companies interact with consumers, increasing the transparency of telecommunications access fees for consumers, and consolidating the Office of the Consumer Advocate and parts of the Public Utilities Commission (PUC) into the Attorney General's office to create one agency with jurisdiction over consumer protection.  Similar reforms in Indiana helped create 2,000 new private sector jobs and generate $1.5 billion in industry investment through greater competition.  Georgia taxpayers saved $15 million per year through adopting reforms in telecommunications regulations.

The prevailing wage mandate costs taxpayers an estimated $1 billion each year through increased labor costs on government projects.  On top of this are the taxpayer costs of monitoring and enforcement, and the employers' costs of staff time to complete paperwork and fulfill reporting requirements. Lawmakers should reexamine the necessity of prevailing wage laws, increase the project threshold amounts, exempt school districts and hospitals from mandates, or eliminate the prevailing wage law entirely.

The Marcellus Shale industry is one of the few industries growing in the state, despite one of the worst recessions in years. In 2009, the industry paid out $2 billion in signing bonuses to landowners and will generate $8 to $15 billion in economic activity each year in the state, according to FBR Capital Markets. To ensure the Keystone State remains a competitive location for natural gas development, lawmakers should consider how drilling oversight could be improved, including preventing agency overlap and encouraging predictability among local government ordinances and zoning.

These three areas represent but the tip of the iceberg of opportunities for Pennsylvania to begin streamlining its regulations. This report looks at comprehensive streamlining efforts in other states, and calls on Gov. Tom Corbett to convene a temporary commission of business leaders, regulators, and experts to create a plan for reducing the maze of regulatory agencies.  Streamlining state government will better serve residents, bring state expenses into line with revenue, and encourage economic growth.

Click Here for a Chart Highlighting State Agencies.