PA governor boasts support for ethane cracker tax credit - WOWK 13 Charleston, Huntington WV News, Weather, Sports

He appeared at a Capitol news conference with several dozen union and business group representatives, as well as lawmakers from both parties, in a show of support for his proposal for a $1.7 billion tax break designed to lure an integrated petrochemical industry to a state wracked by the flight of manufacturing jobs in recent decades.

Corbett faces lawmakers uneasy over the appearance of an industry giveaway and possibly a suspicious public at a time that his administration is pressing for a second straight year of tax cuts for businesses and cuts in aid for education and social services.

"For the general public, that might be hard to understand because ... they think we're giving money to them," Corbett told a news conference. "No, we're not. What we're saying is, 'You build it. You provide all these jobs for all these people and we'll take a little bit less money from you so that we have more money for us.'"

Conservatives have expressed discomfort with the kind of tax break they have opposed in the past, and liberals are angry over this latest idea for a taxpayer subsidy after accusing Republicans of giving the booming natural gas industry a pass on paying their fair share of taxes.

Asked whether he believes enough votes will emerge in the Legislature, Corbett, a pro-business Republican who is viewed as an ally of the natural gas industry, singled out a handful of Democratic lawmakers who stood on stage with him.

"With some friends from the other side of the aisle here, I think the support will be there," he replied.

The plan is in response to the tentative commitment by a subsidiary of Netherlands-based oil and gas giant Royal Dutch Shell PLC to build a multibillion-dollar petrochemical refinery in the southwestern Pennsylvania town of Monaca, about 30 miles northwest of Pittsburgh.

Such a refinery would be the first on the East Coast.

Details of the tax credit started to become public in recent days as Corbett began to press the Republican-controlled Legislature to approve it before the end of June. With less than two weeks until they leave Harrisburg for the summer, lawmakers are still trying to get a better grasp on the details of the proposal.

Corbett called the opportunity to secure such a project a once-in-a-lifetime chance to usher in "a new industrial revolution in Pennsylvania" that could employ thousands of people. The tax credit is designed to try to get a chemical manufacturing industry to come with Shell, as well as other companies willing to spend billions of dollars to build other refineries.

Shell's so-called ethane cracker would convert natural gas liquids from the bountiful Marcellus Shale formation to ethylene, which chemical manufacturers can then use to produce chemicals that go into everything from plastics to tires to antifreeze.

Shell views the tax credit as a way to help ensure that ethane is abundant and affordable for the life of the refinery, which it says could extend for three or more decades. The worry is that natural gas producers would be more inclined to pipe the ethane from the Marcellus Shale field to Gulf Coast refineries, Shell said in a June 12 letter to lawmakers.

The proposed tax credit — a maximum of $66 million a year for 25 years beginning in 2017 — is calibrated at that level to be offset by new tax collections the industry would generate from the economic activity and jobs it adds to the state, administration officials say.

At a nickel per gallon of ethane purchased and used in manufacturing ethylene in Pennsylvania, the tax credit would be proportional to the industry's activity and the resulting collections of new taxes on things like sales and income, Revenue Secretary Daniel Meuser has said.

The site of the Shell plant also would be located in a tax-free zone created for it, although Corbett administration officials won't say what they believe the value of that would be to Shell.