Gov. Josh Shapiro’s 2024 Budget Pitch Draws on Lessons from Curdled Fairlife Bid

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BELLEFONTE — When major dairy brand Fairlife chose New York over Pennsylvania for its new production facility last year, lawmakers and industry figures didn’t bite their tongues.

They blamed the failed bid and the missed $650 million investment on challenges with Pennsylvania’s permitting process, a lack of construction-ready sites and a shaky supply chain.

While Gov. Josh Shapiro, a Democrat, didn’t mention Fairlife directly in his budget address, his $48.3 billion proposal reflects lessons from the experience. His spending plan earmarks hundreds of millions of dollars to prepare commercial and industrial sites for new owners, recruit new businesses and fund agriculture grants.

Agriculture and business development officials say the budget plan — along with the development strategy Shapiro rolled out earlier this year that identifies agriculture as a sector to target for economic growth — makes strides toward supporting existing farming operations and making Pennsylvania an attractive place to operate a business.

“The agriculture sector is a critical industry in Pennsylvania’s economy. It impacts a lot of related, downstream employers as well,” Alex Halper, vice president of government affairs for the Pennsylvania Chamber of Business and Industry, told Spotlight PA. “Certainly, thinking about agriculture as part of the broader economy and how we can keep moving Pennsylvania forward is a smart approach.”

In his budget address and during events promoting the spending plan, Shapiro has said these proposed investments will make Pennsylvania a more competitive and attractive place for businesses to set up shop. Shapiro recently touted a $10 million grant and loan package his administration offered the Maryland & Virginia Milk Producers Cooperative Association, which recently purchased a manufacturing plant in Philadelphia.

A spokesperson for the governor said the administration wants to make such investments more common.

Pennsylvania officials attempted to lure Fairlife with $15 million in tax incentives as part of a larger, hastily passed $2 billion tax credit package. But New York ultimately made a more compelling proposal to the company, state officials told Spotlight PA.

“It was all hands on deck,” Shapiro said of the failed bid during a press conference in Juniata County last year. “In effect, what we learned from this process may end up being even more important than landing that deal.”

Shapiro noted that officials realized Pennsylvania needed to be quicker on permits, have better financial incentives for companies and make sure the state had the capacity to ensure there were enough cows to supply milk.

“I’m confident we’ll put that tax credit to use. We will land a big ag deal here in Pennsylvania, and we’ll be ready to rock and roll soon into the future,” he said. “So, did we land it? No. Did we learn a lot? Yes. And are we going to get one in the future? Absolutely.”

Pennsylvania lacked a location ready to accommodate the roughly 100-acre facility, said state Sen. Elder Vogel (R., Beaver). Plus, permits would’ve added months to the construction process, he said.

Shapiro’s budget earmarks $500 million to make more locations “shovel-ready,” so a company doesn’t have to redevelop a property on its own.

David Smith, executive director of the Pennsylvania Dairymen’s Association, told Spotlight PA that while the New York production facility will likely benefit the dairy industry across the Northeast, he noted lawmakers’ disappointment.

“They’re making big strides right now,” Smith said of the proposed investment for site readiness.

Shapiro also wants to use $10.3 million for a new grant program that would promote savings throughout the agriculture sector by giving companies access to better equipment and innovative technology.

Farmers previously shared mixed views on the proposed grant dollars, telling Spotlight PA that while they support state efforts to optimize their work, they’d like the state to also help them adjust to industry trends like “agritainment.”

The Pennsylvania Association for Sustainable Agriculture supports the innovation funds, said Lindsey Shapiro, who works as the group’s Farm Bill campaign organizer. She’s also a vegetable farmer in Berks County.

State Rep. Jordan Harris (D., Philadelphia) and state Sen. Vincent Hughes (D., Philadelphia) said the proposed grant program would help increase productivity and cut the workload for farmers and other producers — efforts that would make Pennsylvania more competitive.

Republicans, including those who control the state senate, say the governor’s full budget plan as proposed has no chance of making it over the finish line, because it is fiscally irresponsible. Agriculture investments, however, have received bipartisan support.

Beyond the budget plan, agriculture lobbyists and some lawmakers argue additional regulatory changes and updates to farming-related taxes are still necessary.

State Sen. Scott Martin (R., Lancaster) said Pennsylvania often fails to entice agricultural businesses due to “onerous” permitting requirements, tax regulations and a lack of sites ready for development. Anything to address those challenges “is a step in the right direction,” said Martin, who chairs the state Senate Appropriations Committee.

The Pennsylvania Farm Bureau, a lobbying group representing thousands of farmers, told Spotlight PA that permitting is still a top concern among its members looking to expand their operations with new construction projects.

Andrew Holman, a policy analyst for conservative Commonwealth Foundation think tank, which opposes the proposed innovation grant program, said adjusting farming-related taxes would be a better way to support the agriculture industry. They support increasing the state cap for net operating loss carryover, which currently allows businesses to deduct one year’s losses from profits in future years.

Whatever comes next, lawmakers have the Fairlife whiff front and center as they plan the future of Pennsylvania agriculture.

“I think that the governor’s focus on making sure that we have sites available for people to have companies come in and set up, so they don’t have to redo the site themselves, that’s where the lessons learned comes in,” state Rep. Emily Kinkead (D., Allegheny) told Spotlight PA.

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