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Quick action expected on state budget, tax credit

| Monday, June 25, 2012, 12:04 a.m.

Gov. Tom Corbett will likely have a state budget and a 25-year tax credit plan for a petrochemical plant in Beaver County on his desk by the end of this week, analysts and lawmakers said.

Support from Western Pennsylvania Democrats and majority Republicans as well as pressure from the governor's office solidifies the tax credit's prospects, said Chris Borick, the director of the Institute of Public Opinion at Muhlenberg College.

“The fact that he's giving a hard push on this, not only publicly but also behind the scenes, increases the likelihood that the Legislature will pass it,” he said.

Republican leaders said they plan to move on the tax credit this week, though it may change from its initial $1.6 billion total, meant to entice Royal Dutch Shell PLC to build an ethane “cracker” plant at a site near Monaca.

Republican leaders and Corbett say they want the tax credit as part of an on-time budget, approved before the deadline at midnight Saturday. It would be the second timely budget under Corbett, who took office in January 2011.

The final state spending plan is likely to be $500 million more than Corbett proposed in February. It restores many of the cuts Corbett called for and expands educational scholarships to private schools. State funding for public schools is expected to remain at the current level. Flat funding is also proposed for state-related universities such as the University of Pittsburgh, Penn State University, Temple and Lincoln, which Corbett wanted to cut by 30 percent.

The Educational Improvement Tax Credit, created under former Republican Gov. Tom Ridge, would be doubled from $75 million to $150 million. The scholarships for private and parochial schools are paid for by businesses, who in turn get tax credits from the state. The $75 million increase is expected to include $50 million targeted to the poorest school districts.

Through the tax credit, the cracker plant would be able to discount taxes on each gallon of ethane the plant purchases, starting in 2017. The plant “cracks” the ethane into ethylene, used in manufacturing dozens of different products, which supporters say will bring thousands of jobs.

“We are investing in the opportunity for thousands of Pennsylvanians to have a good job,” Corbett said last week.

But questions from legislators on both sides of the aisle persist, and it is unlikely the proposal will have a hearing this week before it is voted on.

Those concerns included the number of jobs projected, whether they would be Pennsylvania jobs (the proposed site will be near the border with Ohio), how the tax credit would interact with a proposed tax-free zone at the plant and the state's budget priorities.

“They are asking us to sign off and support something that we haven't seen and haven't worked on without having had hearings or any vetting of the legislation,” Minority Leader Dan Frankel, D-Squirrel Hill, said. “This is not the way that we should be dealing with a complicated issue and complicated legislation.”

Barry Kauffman, the executive director for Common Cause Pennsylvania, a nonprofit advocacy group for open government, expressed concern that not enough information has been released about the plan.

“I think they (supporters) need to demonstrate how this is going to happen and provide some numbers to back it up,” he said.

Steve Miskin, spokesman for House Majority LeaderMike Turzai, R-Bradford Woods, compared the tax credit to others in the state, such as the Film Tax Credit and the Educational Improvement Tax Credit, which have received hearings.

“These tax credits have been thoroughly vetted by the public,” Miskin said. “This (tax credit) has been all over the media and interested people have had plenty of chances to weigh in.”

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

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