Blown cap: The state gas incentives should have had limits
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One of the surprises in the final version of the state's $27.66 billion budget was not a deeper cut but a lifted cap.
Gov. Tom Corbett had fought for a tax incentive he believes will secure for Pennsylvania a multi-billion-dollar ethane processing plant and the thousands of construction jobs that go with it. The proposed plant, for which Shell Oil Co. has selected a site in Beaver County, has been eagerly sought by Ohio and West Virginia as well, according to the administration.
During the budget negotiations the governor asked legislators to approve a five-cents-a-gallon tax credit for companies that buy and process ethane produced by gas wells in Pennsylvania. We supported the structure and the numbers that defined the governor's plan, which would have issued up to $66 million a year in tax credits, for a total of $1.65 billion in 25 years.
Then Pennsylvanians learned, after the moments-before-midnight budget signing on Saturday, that the final form of the tax incentive, which will begin in 2017, has no annual cap. Legislative aides said that change will give the state greater ability to attract more companies, each of which must invest at least $1 billion and deliver 2,500 construction jobs to qualify for the break.
While we hope those eligibility requirements are air-tight, legislative and regulatory loopholes often allow for numbers to be fudged. The full extent of the incentive must pay off, and not turn into a giveaway.
Mr. Corbett is the one who has warned of Pennsylvania's revenue problems for two budget seasons and who has said the state must fund only the level of services it can afford. We agree, and for that reason the state's taxpayers might have been better served by the governor's original capped proposal.
First Published July 5, 2012 12:00 am