Marcellus Shale Welfare Fund May Benefit From Increased State Revenues

Posted by By at 26 June, at 07 : 52 AM Print

It’s looking as though Pennsylvania lawmakers may repeat last year’s performance and get the 2013 budget approved in time for them to go home for the July 4 holiday.

That’s important. The hot dog industry is depending on them. Well, maybe not entirely, but surely their contribution, what with all the appearances and handshaking they’ll be doing, will be significant.

To get it done, House and Senate Republicans (Democrats – at least those who would object – have pretty much been left out of the discussions) seem to have struck a deal with Gov. Corbett.

If he will agree to not cut education funding below the cuts he made last year, they will increase taxpayers’ contribution to his favorite charity – the Marcellus Shale natural gas industry – specifically, an ethane “cracker” plant Shell Oil Co. is contemplating building in Pennsylvania, Ohio or West Virginia. If the plant locates in the Keystone State, its 400 jobs will replace some of those lost to North Carolina when zinc producer Horsehead Holding Corp., vacates the Beaver County property.

As I noted in a previous column, the legislature already has contributed the cost of state income and property taxes over the next 15 years to the Marcellus Shale Welfare Fund, specifically to entice Shell Oil to build the plant in Pennsylvania.

Now it appears poised to contribute another $1.65 billion in Resource Manufacturing Tax Credit, to be spread over 25 years. Corbett says the money will result in thousands of jobs “across the state.”

The deal is possible, Corbett said, “because we believe there’s more money coming in” than was anticipated when he presented his proposed 2013 budget earlier this year.

Speaking Sunday on “Face the State with Robb Hanrahan,” the governor justified the tax credits programs saying, “You have to be able to compete” with Ohio and West Virginia.

But the plant would be within a few miles of Ohio, and only about 100 miles from West Virginia. There is no law saying PA companies must employ PA residents, nor is there a requirement that they use PA companies for supply and support.

On the other hand, Corbett also explained that other petrochemical plants, will be built within the Keystone State to use the output of the Shell ethane cracker. The natural gas taken out of the ground, and the output of the cracker plant, must be used in Pennsylvania for a company, such as Shell, to be eligible for the tax credits.

“You’re reindustrializing southwestern – and all of Pennsylvania, really – because this ethane can be moved forward.”

On the same show Sunday morning, Democratic Strategist Tony May noted the program will “be self sustaining in the sense there will be new jobs, new people paying taxes, (who) will help replace the funds that are going to be lost in the credit.”

And Shell will be allowed to sell some of its excess tax credits – with an estimated value of $66 million a year.

If any of the low-income private citizens of Pennsylvania, not to be confused with the state’s corporate citizens, were to report income when applying for welfare, they would be denied. If they failed to report income, we could be certain of newspapers reporting jail terms, and politicians decrying “waste and fraud.”

And if they obtained more food stamps than they needed and sold some, I’m guessing the jail terms would be longer.

In the meantime, Corbett has said he wants school districts to use up their reserves. That is money districts set aside for emergencies, and money at least some districts have already been tapping to keep from firing teachers and cutting programs.

Even if the governor and the legislators agree on a plan to restore public and post-secondary education to last year’s funding, that still is a cut. Ask any employee whose company has had him working “without a contract” several years. Expenses keep increasing, while the money to pay them stagnates.

But here we are with a great source of education revenue, and it looks as though we’re about to give it away. What could we do for schools with $2 billion we taxpayers are about to give Shell Oil, a member of the largest revenue producing company on the planet.

ExxonMobil has a series of ads protesting the United States’ low academic standings among the nations. “Let’s solve this,” ExxonMobil says.

But the ads never say how to solve it. They never suggest that ExxonMobile, or any of the other fossil-fueled energy producers, might contribute to any efforts to improve educational opportunities to our students.

Last fall, with the aid of Sen. Pat Toomey, (R-PA), Sunoco won a federal exemption to a law that would have required it to hire – and pay – U.S.-flagged ships and crews to shuttle natural gas from eastern Pennsylvania to refineries on the Gulf Coast.

Now the state’s lawmakers appear poised to give $2 billion to a company that clearly does not need it, on the chance that the jobs that come with it will employ enough taxpaying Pennsylvanians, long enough,  for the state to break even.

Photo by Gerry Dincher
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- who has written 169 posts for Rock The Capital
John Messeder is an award winning journalist with more than 35 years experience writing about education, environment and local government issues. He has lived in Maine, Florida, California and Alaska, and, by temporary turns, numerous places in between. John also is an accomplished photographer, and avid hiker, conservationist, oral history buff, and author of several books he has not yet got 'round to writing. He lives in Adams County, Pa., just over a hill from Gettysburg, with his wife and Golden Retriever. He may be contacted at - Email jmesseder

Marcellus Shale Pennsylvania Issues Political

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