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Lowman Henry
Lowman Henry

Lincoln Blog

by Lowman S. Henry


Cracker Plant 'Misunderestimated'


June 22, 2012

The Corbett Administration is beginning to look like a state-based reincarnation of the George W. Bush White House: even when it does something really good, it can't communicate it properly.

That is the case with the proposed tax credits to help secure the locating of a Royal Dutch Shell petro chemical "cracker plant" in job-starved Beaver County.

How a project that would spark a manufacturing renaissance in Pennsylvania, created hundreds of new family-sustaining jobs, open a market for Marcellus Shale gas, generate thousands of spin-off jobs and trigger a flow of new tax revenue from payroll, sales and corporate taxes could be viewed as a negative is an astounding act of political incompetence.

This past week the Governor's office finally got its act together assembling a unique coalition of business and union groups (remember a rising tide does lift all boats) in an event that should have been held to launch the initiative rather than be an exercise in damage control.

By allowing the proposed $1.7 billion tax credit to leak out rather than be announced in grand fashion by the Governor, the administration squandered its best opportunity to date to clearly demonstrate to the public that its pro-growth policies actually work and that Governor Corbett is indeed delivering on his promise to attract new jobs to Pennsylvania.

Instead, the tax credit plan has been mischaracterized as corporate welfare. The fact is that the tax credit is NOT an up-front gift to Royal Dutch Shell. It will NOT siphon money from the general fund budget that might over the next several years be spent on education, fixing the roads, or other supposedly under-funded areas of the state budget.

Rather, Royal Dutch Shell must spend its own dollars to build the plant and get it operational. The tax credits kick in when they actually begin producing the product and it is sold. Also, it should be noted, tax REVENUE will be being produced from payroll taxes, corporate taxes and the myriad of other success penalizing levies state government imposes on the private sector.

In short, when the "cracker plant" gets up and running it will produce more tax revenue than will be abated by the tax credit.

So how then is the creation of all those jobs, and the establishment of a new stream of tax revenue corporate welfare or anywhere near bad for Pennsylvania?

Fortunately, the Governor's team this past week regained its footing and began to get the facts out. This is critical because location of the facility in Beaver County is not a done deal. West Virginia and Ohio are still panting after the facility. It is important that Royal Dutch Shell knows Governor Corbett can indeed deliver on his promises.

As of today, it appears as though the Governor has the votes needed to get the tax credit approved by the General Assembly before they head off on their extended summer vacation. Unfortunately, he had to yield to the state Senate's big-spending budget demands to seal the deal, but give the Governor credit for what will likely be another no tax hike budget done on time.

A complete explanation of the tax credit program can be heard on this week's Lincoln Radio Journal with state Revenue Secretary Dan Meuser guesting on Capitol Watch with David Taylor and Kevin Shivers. Hear the interview at www.lincolnradiojournal.com.



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