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Cracker tax credit bill to require minimum standards

| Wednesday, June 27, 2012, 11:04 a.m.

HARRISBURG — A tax credit designed to lure a petrochemical company to Beaver County is expected to be voted on in the state House today, a Republican Caucus spokesman said.

The controversial tax credit will be part of a state tax code bill. Despite the imminent vote, the language was not available last night.

Companies seeking state tax credits in 2017 for a proposed ethane cracker plant would need to meet initial thresholds in capital investment and job creation, according to a House member and senator sponsoring legislation to authorize the tax breaks.

In an effort to rebut criticism and gather support, Rep. Jim Christiana, R-Beaver, and Sen. Elder Vogel's Chief of Staff Owen Thomas said the final negotiated tax credit legislation requires that minimum investment and employment standards be met. Those include creation of at least 2,500 jobs and an investment of $1 billion in construction of a plant.

“This is a welcome development and reflects standard practice which attempts to hold companies accountable to meet job targets,” said Sharon Ward, executive director of the Pennsylvania Budget and Policy Office. “We hope the bill will include annual reports by the company, also standard practice for economic development subsidies of this type.

Senate Minority Leader Jay Costa, D-Forest Hills, called it “a game changer” in Western Pennsylvania's economy. The minimum standards to qualify are well under numbers used to describe the project for Beaver County.

Royal Dutch Shell plc has said it would invest several billion dollars and the Corbett administration maintains 10,000 to 20,000 jobs would be created.

Most of that is in construction and spin-off employment. The plant would employ hundreds of people.

Corbett proposed a $66 million annual tax credit in hopes of luring Shell to Beaver County, where the company has an option to purchase property for a plant near Monaca.

The $66 million figure is no longer in the legislation, Thomas said. “We don't know if $66 million is the magic number or not,” Thomas said.

The tax credit will no longer be capped under the bill, the governor's office said.

Brian Oros, 51, an ice salesman from Uniontown, said he doesn't trust the job predictions state officials have been making. He's not convinced the credit is necessary or beneficial, considering previous breaks for companies such as Volkswagen, Sony and US Airways that he believes didn't justify the taxpayer expense, he said.

“They're giving this company all these tax breaks, then they're going to put them in the (Keystone Opportunity Zone), a tax-free zone. They're getting it twice, and we've got people out there with no jobs and can't pay their mortgage,” Oros said. “I disagree with it. I figure the gas is here, and they're going come here anyway.”

The amount of tax credit available to a company will be a credit of 5 cents per gallon of ethane purchased from production at the plant.

Critics earlier claimed there was little accountability for the proposal.

Under the legislation, the Department of Revenue will be required to submit an annual report on the credits to the General Assembly.

“This will provide information that will allow us to evaluate the effectiveness of the tax credit. The report must include information on what companies are utilizing the tax credit, as well as the amount,” Thomas said.

The Department of Community and Economic Development will report to the General Assembly in 2028, Thomas said. This report will require DCED to show all of the taxpayers who have been granted tax credits and how much.

The report must also provide the total number of jobs created, the average annual salary and wage information, and the taxes generated, according to Thomas.

Brad Bumsted is state Capitol reporter for the Tribune-Review. He can be reached at 717-787-1405 and bbumsted@tribweb.com. Timothy Puko is a staff writer for Trib Total Media. He can be reached at 412-320-7991 or tpuko@tribweb.com.

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