Cracker plant tax break may leave schools with crumbs

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Times were so tough in Center Township, Beaver County, in the early '80s that a McDonald's closed up shop.

Daniel Matsook shared that tidbit of local lore as he drove among the vast smorgasbord of big box stores and strip-mall retail that punctuate the township's main drag. Mr. Matsook, one of several Matsooks to coach high school football in the county, is currently more worried about dollars and cents than Xs and Os.

As the superintendent of the sprawling Central Valley School District, he's the guy who will have to make the numbers work when -- and if -- Royal Dutch Shell builds a petrochemical plant along the Ohio River.

That plant is mostly good news because it means jobs. This cracking plant, fed by the Marcellus Shale natural gas boom, would take the place of a zinc smelting plant. That company, Horsehead, is moving operations to a new smelter in North Carolina that's supposed to start up late next year.

The trouble with this industrial version of musical chairs is what it took to lure a multinational like Shell. Trickle-down economics sounds simple, but so does "billion-dollar tax break.'' (That's the "free'' in free market, kids.) The Central Valley School District and its feeder communities are about to face what Pittsburgh does with its hospitals and universities: a regional economic engine that pays no property taxes.

The school district would lose $275,000 in property taxes if the plant site becomes a Keystone Opportunity Zone. Potter Township, the rural community of 540 residents that hosts the plant, would lose about $40,000 -- roughly 7 percent of its budget.

The cracker plant would be exempt from state taxes, too, a break that would last 15 years under the legislation pushed by Gov. Tom Corbett and approved by the Legislature this past winter. There's another 25-year tax break on the ethane purchased for the facility, too.

If the plant does what it's supposed to do, many of the children of this plant's workers will be landing in a district that already has its middle and primary schools at capacity. Of course, managing an enrolment boomlet beats watching an exodus.

Mr. Matsook is remarkably unruffled about this predicament, maybe because he's been in tougher games. He coached Rochester High in the years when the winner of the Rochester-Monaca game was awarded "The Largest Trophy in the World" -- the bridge across the Ohio was called the Rochester-Monaca Bridge or the Monaca-Rochester Bridge depending on which team won the game each year.

Anyway, most of that commercial development along Route 18 was lured by tax-increment financing that has kept revenue out of the schools' coffers, too. Central Valley, which formed only three years ago when the Center Area and Monaca schools merged, already has handled enrollment spurts and dips and, Mr. Matsook says, "managing that pace is our challenge."

A unique local tax wrinkle complicates this further. The cracker plant is expected to attract other businesses, but the revenue the school district can collect from the mercantile tax is capped at $300,000. Mr. Matsook told a House Appropriations Committee last week the schools could manage their growth if that cap were removed. The same, or maybe a better, exemption from the tax for the district's small businesses could stay. "We fully support the growth but help us help ourselves," Mr. Matsook said. "Let the money flow as we grow."

Shell officials have brought Beaver County officials to its Louisiana plants and also held community meetings at Central Valley High School. Rebecca Matsco, a rookie supervisor on the Potter Township board, praised Shell for being proactive and said its people "seem to understand their position comes with community obligations."

A Shell spokesman said Friday the company was open to discussing revenue options with local officials but it was too early for details.

An insufficient supply of ethane could still keep Shell away. The price of that lucrative "wet gas" byproduct has fallen over the past year with natural gas prices. So these questions remain as a new school year begins.

Will the multinational mitigate the state's tax benevolence? Shell will call the shots. Whatever the answer, the question would be a good one for any Central Valley advanced civics class.


Brian O'Neill: or 412-263-1947.


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