HARRISBURG (June 7) – A state policy group wants to know why Gov. Tom Corbett wants to give Royal Dutch Shell a tax credit worth $1.65 billion for jobs other companies may bring to Pennsylvania?
Senate President Pro Tem Joe Scarnati, R-Jefferson, said legislative leaders are awaiting a briefing from Gov. Tom Corbett’s staff on that and other related Shell issues.
“There are a lot of questions, including this one, that need to be answered,” he said. “We need answers.”
Administration officials did not respond to multiple requests for comment.
Sharon Ward of the Pennsylvania Budget and Policy Center, a liberal think tank, says the Department of Community and Economic Development’s job estimates make her wonder about the strategy the state is pursuing.
Under incentives already announced by Gov. Tom Corbett, if Shell builds an ethane cracker petrochemical facility in Beaver County, they will get a tax-free business site in Beaver County, and the state will pay to clean up the Horsehead Corp. zinc smelting site.
The reason to do that, DCED Secretary Alan Walker and Corbett have said, is jobs. At least 400 jobs at the ethane cracker plant are required to keep the site’s tax-free status, as of 2017. Plus 10,000 construction jobs over the next five years.
Walker also estimates that the companies who use the plastics and other products to manufacture goods will come to Pennsylvania as they have to other states with cracker plants.
His assessment is that will amount to 10,000 to 20,000 additional jobs. Corbett has said that will help rebuild the state’s manufacturing base, and many business and energy analysts have echoed Corbett and Walker.
Ward wrote in an e-mail: “The question is who is creating the jobs in exchange for the tax credit? The public statements made by Secretary Walker and others suggest that the 15,000-20,000 jobs are not direct jobs promised by Shell, but jobs that might be developed sometime in the future by companies that will purchase the ethylene generated by the plant.
“So the question is simply: Is Shell creating 15,000 jobs? Or is Shell extracting a bonus for jobs that might be created sometime in the future by others?”
Walker and Corbett and many energy industry experts said if the cracker is not built, the other jobs will not come, and the company will not invest to build it without the various incentives.
Ward wrote that this deal: “…would seem to differ as well from prior economic development deals, which hold companies accountable for direct jobs. And finally, given the precedent, will new industrial plants come to the state hat in hand leading to an ever escalating bidding war among the states? Just askin’.”
Ward also questioned how many of those jobs would actually come to Pennsylvania.
“The [western Pennsylvania] region is integrated economically, so the jobs will likely go to people from all three states,” said Ward. “Jobs don’t recognize political boundaries.
“The spinoff industries that are supposed to be created using the ethylene could be existing plants or new plants in W VA or Ohio. So PA taxpayers are footing the bill for spinoff industries that might be created in Ohio, West Virginia or other states.”
Scarnati and his chief of staff Drew Crompton, have both said any enabling legislation to create the tax credit would include “clawbacks” if the promised levels of job creation did not occur.
But with multiple companies in multiple counties or states likely to host those new jobs, Ward asked how legislators would measure the job creation resulting from the cracker plant’s construction.
And, she asked: “Who is accountable if jobs don’t materialize?”
