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Senators Seek Accountability for Taxpayer Investment in Cracker Plant

Washington and Kitchen to offer job accountability benchmarks

 

HARRISBURG -- June 22, 2012 – The Corbett administration must be accountable for the jobs created with the $1.65 billion worth of Pennsylvania tax credits that may soon be invested in a new Shell petrochemical plant in Beaver County, two Philadelphia-area state senators said today.

            State Sens. LeAnna Washington and Shirley Kitchen, both Philadelphia Democrats, said that they will offer a detailed job accountability amendment to legislation likely to be considered in the Senate next week that will authorize the tax credits. 

            “This is a huge investment and commitment by the taxpayers of Pennsylvania into one of the most lucrative companies in the world and taxpayers deserve to know that their investment is worthwhile,” Washington said.  “We need to create jobs and we need to move forward on critical projects, but we also need to see results too.

            “This cannot just be a giveaway and there must be measurable job creation standards or the tax credits should be shutdown.”

Washington said that the senators’ proposal includes job creation benchmarks.  She said that their plan requires that if the number of jobs created is less than 1,000 in the year after the tax credits are issued, then the credits would be reduced by a specified percentage. 

This job creation standard increases incrementally for subsequent years until 2024-25, when it is expected that at least 15,000 jobs directly linked to the taxpayer investment will be created, Washington indicated.

Kitchen said that the amendment would require the state Department of Economic Development to count the number of jobs directly created by Shell or another related industry or service business that can be attributed to the new plant.  “Jobs cannot be counted twice” for the purpose of achieving the benchmark, Kitchen noted. 

“Pennsylvania taxpayers should expect that a significant, long-term investment of state resources in the plant creates the real jobs,” Kitchen said.  “There is no question that this plant has a chance to revitalize a region hard hit by economic dislocation, but the jobs created by the state investment need to be real.

“When critical human service funding is being cut, and schools are being told that there is little help on the way from Harrisburg, there needs to be strong accountability for the investment that taxpayers are making in Shell.”

            The Corbett plan reportedly does not involve direct payments to Shell.  The taxpayer investment is in the form of lost tax revenues due the state from business activity involving the Shell plant. 

             The legislation is expected to authorize $66 million in tax credits for Shell per year beginning in 2017.  Shell is reportedly planning to locate the petrochemical plant in a Keystone Opportunity Zone (KOZ) and will have no local or state tax liability.   Businesses in a KOZ are exempt from paying state and local taxes. 

It is estimated that the plant itself will employ 500 workers.  The Corbett administration says that the plant will generate 10,000 jobs in construction and another 10,000 in related industries. 

            “The need to create jobs is clear but we must use Pennsylvania resources wisely,” Washington said.  “Strict accountability for jobs created is a critical piece of this project because Pennsylvania taxpayers are potentially sacrificing significant amounts of revenue that can be invested in our schools, safety net programs and our workers.”

            Kitchen said that she understands the need to generate economic activity but that the lack of information on the project has become an obstacle.

            “There should have been detailed briefings from the Corbett administration for members of the General Assembly, especially since lawmakers are involved in approving the tax credits,” Kitchen said.

 An ethane cracker siphons ethane from “wet” Marcellus shale gas.  The resulting ethylene is used in a variety of consumer products including children’s toys, diapers, tires and many other goods.

 

 

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