When Governor Corbett meets with legislative leaders to kick of budget negotiations this afternoon, another item will be on the agenda too: the administration’s proposed $1.7 billion tax break for Shell Oil, which is considering building a large ethane cracker in Beaver County.
Legislators will have many questions about the proposal. Among them: whether this tax break is part of Corbett’s initial agreement with Shell, or something that developed after the company committed to studying the Monaca site in March.
That’s a question top staffers and lawmakers don’t know the answer to.
How quiet has the Corbett Administration been about this proposal? Republican Senator Elder Vogel, who has been asked to introduce the actual legislation, says he first heard of the 25-year tax break when he read about it in Capitolwire Monday morning.
The only thing legislators know: Shell would receive $65 million in breaks a year, for 25 years. It’s unclear whether the benefits would include any conditions, since the actual legislation hasn’t been circulated yet. The proposed site is already located in a tax-free “Keystone Opportunity Zone.”
Vogel defends yielding $65 million in annual tax revenue for a quarter-century, pointing to the thousands – perhaps tens of thousands – of jobs a major industrial plant would bring to his district. “You’ve got to spend money to make money, I guess. We give money to the film industry. …This situation comes along once in a lifetime, and the governor thought [the tax break] was worthwhile. It’s his proposal.”
The Corbett Administration frames the ethane cracker, which converts natural gas compounds into materials used in plastics production, as a regional linchpin. “We could see a renewal of a significant manufacturing base in Western Pennsylvania,” Corbett said when the initial deal was announced. He predicted additional plastic plants would follow the cracker to the Pittsburgh area. “That means more jobs. …more construction.”
Corbett will have to court a skeptical legislature. “I don’t believe this commitment should be made…without a commitment for the company to come to Pennsylvania,” said Senate President Pro Tem Joe Scarnati’s chief-of-staff, Drew Crompton. Shell’s only promise so far is to study the Beaver County site. It hasn’t committed to building the plant there yet. “There is, hopefully, a good justification to the credit,” Crompton continued. “If we are talking about 10 or 20,000 jobs, that’s an incredible number.”
“The governor’s office needs to make the case for this. There might very well be a good case to make. But they need to make it.”
But on the day the news broke, the only member of the Corbett Administration talking was Department of Community and Economic Development spokesman Steve Kratz. ”This is about keeping a resource here and having that economic development happen here,” he told the Tribune-Review. “You can figure out what the job numbers will be and what the economic investment will be if we lose the project, and that is zero.”