States pressured to cut red tape. Data center-wary voters may disagree

Gov. Josh Shapiro couldn’t help but crow a little when he announced a $20 billion economic development deal last June, by far the largest in Pennsylvania history. “This is the kind of deal that every state wants, every state is competing for it,” he said. “But Pennsylvania won that deal. We got this done.”

But the year since has also caused Shapiro pain. That’s because it includes two major Amazon data centers in the state for cloud computing and artificial intelligence. And public opinion of data centers is deteriorating significantly.

One at Emerson College questionnaire Of the 2,000 Pennsylvania adults released in December, 42% of respondents said they would oppose establishing a data center in their community, while only 34% said they would support it.

So last month Shapiro, a Democrat, introduced a new set of what he calls “tough guardrails that will hold data center developers accountable.” Governor’s Responsible Infrastructure Development (GRID) standards require companies to certify that they will either provide their own energy or pay 100% of costs to keep local power grid rates reasonable; that they will promote “transparency and community engagement”; He said that they will support the workforce and protect the environment.

All are laudable goals. But they complicate one of the governor’s most cherished economic development priorities: cutting red tape.

“Pennsylvania had a reputation as a slower and more difficult state to do business,” Pennsylvania Secretary of Community and Economic Development Rick Siger said in an interview. “We needed to make really rapid progress to solve this problem.”

One of the measures they took was to catalog all 2,400 licenses and allow the government to issue them, setting a reasonable time frame for processing them and offering a money-back guarantee if they were late. The state boasts a nearly 72% reduction in overall permit processing times last year.

A simple business license that used to take about eight weeks to obtain can now be processed the same day.

Shapiro also signed a contract executive order Created a program called “Fast Track” for largest projects in 2024; Siger called this the “concierge customer service layer” for the most complex developments.

“For companies growing in Pennsylvania, it’s about speed, certainty and predictability,” he said.

Some communities are stepping back

Economic development experts say reducing red tape has emerged as the most important factor in why companies choose to build in 2026.

“I think the most important thing is speed to market,” said Tom Stringer of Stringer Site Selection and Incentives in New York, which advises clients in a variety of industries including aerospace, defense and automotive. “We’re really only looking at states that have sites ready to go, pre-permitted, infrastructure in place, and incentives lined up.”

Dealing with community opposition to a project goes against that, said site selection consultant Larry Gigerich, general manager of Ginovus in Indianapolis and president of the Site Selectors Guild. “An early screening mechanism for us is places that are really starting to set back economic development, so we’re taking that into account,” he said.

Conflict is on the rise, Gigerich said, and it’s not limited to data centers.

“Many places are starting to see economic development decline for the first time in a long time,” he said. “Not just data centers, but manufacturing projects, distribution centers. There’s definitely going to be challenges going forward in terms of how we address that.”

Siger denied that the GRID standards, which Shapiro is trying to codify in state law, would hinder development. “We don’t add a regulatory layer. We say, ‘Here’s what we think is good.'”

He also said the state’s new emphasis on speed won’t come at the expense of oversight.

“The rules of the road are the same, and by the way, when we talk to companies, they don’t have a problem with it either,” he said. “The first thing they want to know is, what are the rules of the road? What do we need to achieve, what is the path to get there, and how long will it take?”

Josh Shapiro’s complex political calculus

This approach has already brought some big benefits to Pennsylvania beyond the Amazon deal.

In January, Eli Lilly announced it would invest $3.5 billion to build a manufacturing campus for injectable drugs in the Lehigh Valley. CEO David Ricks said Pennsylvania was among about 300 locations competing for the project. “The commitment to expedited permitting, land availability, logistics and an ecosystem around us that really supports the work we do were really decisive in making this decision,” he said.

The project is expected to create more than 800 permanent jobs and a further 2,000 construction jobs.

But the relentless focus on development (especially data centers and artificial intelligence) complicates matters for Shapiro, who is seeking a second term as governor in 2026 and has been frequently mentioned as a presidential candidate in 2028.

His Republican opponent in this year’s governor’s race, State Treasurer Stacy Garrity, is calling for what he calls a “pause” on big data center development. on May 28 Publish on XHe criticized Shapiro’s approach.

“Josh Shapiro rolled out the red carpet for massive data center projects. Now communities are scrambling to do damage control as they voice concerns about water use, energy demands, noise, impacts on zoning, infrastructure and farmland,” he wrote.

Stuart Lacey, founder and CEO of Labrynth, which uses artificial intelligence to measure leave periods and works with governments and businesses, said reforms did not have to be a partisan issue.

“Anything that would remove the friction behind moving the country forward is clearly at the top of the agenda,” he said. “This isn’t party politics. It’s just good business and good for people.”

Labrynth is a “Bureaucracy IndexTo publicly measure progress, the company is providing data on leave periods for this year’s CNBC America’s Best States for Business survey.

They say making the approval process easier in Pennsylvania is part of a much larger goal.

“We want to be a preferred destination for business,” Siger said.

Among the goals set in state official documents economic development strategy: “Be One of the Top 10 States for Business” in CNBC rankings.

CNBC will release our 2026 America’s Best States for Business report on July 15.