PA Budget with Shell Cracker Plant Tax Credit Passes

At 11:45 pm Saturday, Pennsylvania Gov. Tom Corbett, for the second year in a row (and his second year in office), signed into law an on-time budget for the state—a budget that does not raise taxes. No small feat given the current sad state of the economy.

One of the biggest victories for Corbett in this year’s budget (supported by both Republicans and Democrats) was the passage of a tax credit for Shell and other companies who invest in an ethane cracker plant for the state:

But perhaps the main highlight for the governor was the tax incentive sought for ethane-processing facilities, including the multi-billion dollar plant that Shell is considering locating near Monaca.

Beginning in 2017, a nickel-per-gallon tax credit would be offered to companies for purchasing and using ethane from gas wells within the commonwealth. In order to be eligible, a company must invest at least $1 billion and create at least 2,500 construction jobs.

There would be no annual cap on the total credits, compared to an initial proposal for allowing up to $66 million a year. Legislative staffers said that would give flexibility in attempting to woo facilities beyond the potential Shell plant.

The Corbett administration made an unusually aggressive public push for the tax credit, arguing that the incentive is necessary to ensure the company does not decide to locate instead in West Virginia or Ohio.

Labor unions and business leaders both rallied behind the proposal, and it was one of the few Republican-crafted provisions for which some Democrats urged support in the final hours of debate.

"We are told this is the motherload of crackers, and that other crackers may come," said Rep. Rob Matzie, D-Ambridge. "We are hopeful that those jobs will come sooner rather than later."*

The new tax incentive should remove all doubt about the cracker plant possibly being lured away to WV or OH. But as MDN has previously pointed out, it will be two years before Shell even makes its “final final” decision about moving forward with construction of the plant in Beaver County, and after the decision is made, perhaps up to another 10 years to build it (see this MDN story).

*Pittsburgh Post-Gazette (Jul 1, 2012) – Governor Corbett signs new state budget