In a perfect world, Pennsylvania would not have to throw incentives at profitable businesses to lure them. Here in the real world, though, the Keystone State must compete against its neighbors to win jobs and tax revenue.
Given that reality, the incentive package Gov. Tom Corbett put together to persuade Shell Oil Co. to choose Beaver County for a petrochemical processing plant looks like a good deal for Pennsylvanians.
Some are bristling at the notion of $66 million a year in tax breaks -- $1.65 billion over 25 years -- for the successful Houston-based oil giant. Initially, we raised a caution flag, too, but this plan appears to be structured the right way.
The plant, to be situated on a former, 300-acre zinc plant, would process natural gas liquids from shale gas extraction and convert them into plastics and other materials. Pennsylvania would offer tax credits, not only to Shell but also to other companies that build ethane-processing facilities here -- with this caveat: They have to buy the raw materials from local wells.
In addition to that requirement, the tax break could not exceed 20 percent of a company's qualified tax liability. Owners of the facilities also would be able to sell credits to others involved in the ethane supply chain.
The effect of this plan should be to encourage development of local wells. Before Shell builds its large plant, it wants to be sure that Pennsylvania wells will continue to provide adequate supplies for it to process for a long time. In addition, with incentives available to firms beyond Shell, the prospects for significant spinoff industry seem very real.
If the companies perform well enough to reach $66 million per year in credits, administration officials said that business would generate enough personal and business income tax revenue to nearly offset the tax breaks.
All that on top of the prospect of more than 10,000 construction jobs and up to 20,000 permanent positions in the industry is too good to pass up. Pennsylvania can't afford that, and the state Legislature should get behind the governor's plan.opinion_editorials
First Published June 22, 2012 12:00 AM