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Corbett lines up tax credit crew

| Thursday, June 21, 2012, 12:01 a.m.

Government, labor and industry representatives joined Gov. Tom Corbett in Harrisburg on Wednesday to urge lawmakers to pass a tax credit benefiting petrochemical plants.

The governor — surrounded by 28 supporters in Harrisburg who included several Western Pennsylvania Democrats — stood by an industry estimate that one plant could bring 17,000 permanent jobs to the state, though he offered few details when asked about job creation estimates.

“This is the start of opportunity for a new industry and it's going to provide those jobs,” Corbett said.

He said his cabinet researchers contacted other states and agree that luring a petrochemical plant would create thousands of jobs here. His administration made the claim last week in Center, Beaver County, where Royal Dutch Shell plc could build a multibillion-dollar enthane processing plant.

Yesterday's show of solidarity was meant to convince legislators to pass a proposed $1.65 billion subsidy for the gas and chemical industries by June 30, with or without a $66 million annual credit cap and 25-year timeline Corbett proposed.

“When this is done, I want Commonwealth Media Services to take a picture of this because I think this is going to be in the history books someday,” Corbett said of the bipartisan group assembled.

Critics question the cost of the proposed subsidy at a time when the state is cutting money for education and social services, and believe the deal should require recipients to create jobs. The state would dole out credit at 5 cents for each gallon of ethane Pennsylvania manufacturers use starting in 2017.

“If there is no other mention of jobs in the bill, or requirements for job creation, I don't know why we are doing this at all,” said Rep. Phyllis Mundy, D-Luzerne.

Supporters say that because companies would have to spend in order to get the credit, it automatically would lead to investment and job growth.

“We're not giving anything away,” said Allegheny County Executive Rich Fitzgerald, a Democrat who stood shoulder-to-shoulder with Corbett, a Republican from Shaler, through much of the event. “It's almost like hiring a sales representative and paying them on commission ... not giving them the money up front.”

Corbett declined to address a question about job estimates the Pennsylvania Department of Labor & Industry generated, which say the plant might create fewer than half of the 17,000 jobs that the American Chemistry Council projected.

The plant likely would draw 6,000 to 8,000 permanent jobs to the state, according to the department.

Though a department spokesman last week said Labor & Industry officials would finalize their estimates this week, Secretary Julia K. Hearthway yesterday emphasized the numbers are preliminary and said the department's final projection might not be ready by month's end, the deadline Corbett set for passing the bill.

“I don't think the wealth of jobs this will bring to the state can be questioned,” she said.

Pinpointing just how many businesses and jobs a petrochemical plant would draw to Pennsylvania is nearly impossible, several economists and consultants said in interviews during the past week. But that doesn't mean a tax credit is a bad idea, they said.

Shell's facility would be too large and expensive for it to shut down, said David N. Taylor, executive director of the Pennsylvania Manufacturers' Association, at the end of the event. That's a persuasive argument, said Timothy Kelsey, a Penn State University agricultural economics professor who studied the statewide impact of natural gas drilling in the Marcellus shale.

Most of the risk with such tax credits is that companies move when a subsidy expires, Kelsey said. If Shell remains in Pennsylvania for decades, a subsidy of about $14,000 per job wouldn't be out of line with other rebates the state offers for job creation, he said.

“That is a big number but in the grand scheme of things, that's still a lot of jobs,” Kelsey said in a phone interview on Monday.

Timothy Puko is a staff writer for Trib Total Media. He can be reached at 412-320-7991 or tpuko@tribweb.com.

Michael Macagnone is an intern for the Pennsylvania Legislative Correspondents Association. He can be reached at m.a.macagnone@gmail.com.

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