Before we criticize Gov. Tom Corbett for his willingness to hand over the state to the natural gas-drilling industry, we want to note that his administration is to be commended for its attempts to use Pennsylvania's natural gas deposits to attract industries to the state.
In April, Pennsylvania managed to outbid West Virginia and Ohio for a Shell Oil Co. ethane cracker plant largely because Corbett and his team managed to do their bidding quietly with behind-the-scenes negotiations.
While those states were publicly braying about what they were doing to attract Shell, Corbett's stroke of genius was to get the state Legislature to expand the tax-free Keystone Opportunities Zone designation from 10 to 15 years. And he did so without tying the KOZ expansion to the cracker plant bid.
Fifteen tax-free years is hard to ignore, and Shell signed on. Shortly after announcing the deal, Corbett was asked if other tax incentives might be forthcoming.
"We would be open to considering just about anything," he said.
Last week, we found out that "anything" means a tax-credit plan that could give Shell and/or other cracker operators $1.7 billion in tax credits over the next 25 years. That's an additional $66 million per year on top of locating in a tax-free zone.
In return for the tax credits, Shell is expected to create thousands of jobs. Department of Community and Economic Development Secretary Alan Walker estimates that as many as 20,000 jobs could be created. The plant itself is expected to produce roughly 400 jobs. The remainder would be construction jobs and those that belong to ancillary industries that spring up because of the Shell plant.
And that's where our applause turns to a Bronx cheer .
It's one thing for a company to obtain tax credits for creating jobs, quite another to offer tax credits to one company for jobs that are attached to other businesses.
Sharon Ward, an analyst with the Pennsylvania Budget and Policy Center, posed this question:
"Is Shell creating 15,000 jobs? Or is Shell extracting a bonus for jobs that might be created sometime in the future by others?"
Then there is the matter of tax credits.
Capitolwire Bureau Chief Peter DeCoursey noted that the tax credits could be "transferred" to other businesses "at 90- to 95-cents on the dollar."
Wrote DeCoursey, "You essentially get the state paying you cash money, after you swap the state credit for cash, (just) to be here."
It has been reported that the $66 million annually equates to a taxpayer payment of $6,700 per worker for 10,000 workers, or $3,350 per worker if 20,000 workers are hired.
Expanding the KOZ from 10 to 15 years as a way to attract a major manufacturer is smart governance.
Asking taxpayers in this economy to swallow $66 million per year in potential taxes is enough to make taxpayers gag.
- (Lancaster) Intelligencer-Journal