Corbett Wants Speedy Approval Of $1.6 Billion In Petrochemical Tax Credits

Tim McNulty
Pittsburgh Post-Gazette

The Corbett administration already has pitched Shell Oil Co. on a petrochemical cracker plant in Beaver County. Now it has to sell the deal to fellow Republicans, and perhaps more importantly Democrats, to get it done.

At a news conference Thursday, members of the governor’s Cabinet joined with building trade and industrial union leaders and a bipartisan group of Beaver elected officials, to push for speedy approval of $1.65 billion in proposed ethane tax credits over 25 years in this year’s state budget. Without the incentives, they claimed, Pennsylvania could lose the $1 billion plant and thousands of related ethane industry jobs to another state.

“It is very simple. Pennsylvania is either serious about creating jobs or it is not,” said C. Alan Walker, secretary of the Department of Community and Economic Development. If the incentives are rejected, he said, “shame on us and it would be one of the economic tragedies of all time.”

If the administration’s pro-energy rhetoric seemed aimed at Republicans, the public arm-twisting from labor leaders was directed toward their allies in the Democratic ranks. According to Corbett administration estimates, the plant could take about 10,000 workers to build and another offshoot petrochemical company could employ another 10,000 workers, many of them union members.

“We need to look past the election year rhetoric and realize that the issue here is not tax credits. The issue is jobs, and union jobs at that,” said John DeFazio, director of United Steelworkers District 14 and a Democratic Allegheny County councilman.

Some Democrats, including House Minority Leader Frank Dermody, D-Oakmont, have questioned how the state could award $66 million in annual tax write-offs to profitable energy companies when social services and public education programs are seeing cuts this year.

Others have environmental concerns about the Marcellus Shale-related industry, and some have taken a wait-and-see approach.

“The project has the potential to create jobs and economic opportunities, but more information is needed about the total cost, short-term impact and long-term obligations that are part of this deal,” said Hugh Baird, a spokesman for the Senate Democratic caucus.

Combine various Democratic suspicions about the deal with a group of conservative Republican legislators critical of tax incentives of any kind and it lays bare the Corbett administration’s challenge in finding enough votes to approve the tax credit plan.

“I’m optimistic that we’ll be able to get something done, but it will take Republicans and Democrats to get this passed,” said state Rep. Rob Matzie, D-Ambridge.

The proposed petrochemical plant in Potter, Beaver County, would process natural gas liquids from shale gas extraction and transform them into plastics and other materials. Similar bills introduced by Rep. Jim Christiana and Sen. Elder Vogel, both Beaver Republicans, would offer the tax credits to Shell and other companies that locate the ethane-processing facilities in Pennsylvania and buy the ethane from local gas wells.

They would offer a credit of 5 cents per gallon, or $2.10 a barrel, of ethane purchased in the state, on up to 20 percent of a company’s qualified tax liabilities.

State Revenue Secretary Dan Meuser said the tax credit proposal beats a 25-year tax waiver offered by West Virginia and $1.4 billion in incentives from Ohio because it would boost business for gas-related companies other than Shell, turning them into customers and suppliers. It also creates long-term security for the company as it builds the plant, which is something it asked for in direct talks with Mr. Corbett.

The “tax credit provides exactly what natural gas manufacturers and processors are looking for: incentives for spinoff industry that must be created, as well as security that natural gas, the feed stock, will be kept here in Pennsylvania,” Mr. Meuser said.

He also claimed that if companies performed well enough to reach $66 million in credits each year that would create enough personal income and business income taxes to nearly offset the incentives.

After the event at the Community College of Butler County, Corbett administration officials met privately with labor leaders and corporate officials supporting the credits — including Highmark executive vice president Dan Onorato, Mr. Corbett’s 2010 gubernatorial opponent — to go over lobbying efforts. Local Beaver County officials met with Shell executives on the efforts Wednesday.

“I don’t care how they do it,” said Tony Amadio, the Democratic chairman of Beaver County’s board of commissioners. “As long as they compromise and we build a cracker plant in Beaver County, that’s all I want.”

Read more: