Shell game! Corbett's "cracked" scheme to give away your cash to an oil giant
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Shell game! Corbett's "cracked" scheme to give away your cash to an oil giant
They are the world's second largest corporation by revenue, and last year Royal Dutch Shell made an astronomical $31 billion in profits - more than triple what the global oil giant was earning just two years earlier.
But Gov. Corbett apparently doesn't think the hard-earned cash you fork over every time you pull into a Shell station is enough.
He wants to give them your tax dollars, too - perhaps as much as about $1.7 billion over the next 25 years.
It would actually be too kind to call Corbett's corporate-welfare scheme involving Shell's planned ethane-cracking plant on Pennsylvania's far western border a tax break - because the deal has already won state approval to avoid taxes, in a specially created Keystone Opportunity Zone. So this proposed new deal - which was being negotiated in secret until long-time Harrisburg journalist Pete DeCoursey broke the news Monday - is essentially just a straight-up cash giveaway to Big Oil.
For a facility it is already planning to build here.
In the state where it arguably would have been built anyway without a single dollar of tax incentives, since this is where ethane wells are already being drilled.
Did I mention that this is the same Tom Corbett who wants struggling unemployed folks getting food stamps to prove they don't have money stashed away, whose steep 2011 cuts to school funding deeply exacerbated an education crisis that's risking everything from school plays in Upper Darby to the janitor who cleans your son's classroom here in Philadelphia? I guess janitors didn't realize the threshold to get Corbett's attention is $31 billion.
"It's essentially a big giveaway of money we didn't have, to attract a company we were already getting," said Sharon Ward, the director of the Pennsylvania Budget and Policy Center, a progressive think tank, who called the proposal "unprecedented."
It was with great fanfare that the Corbett administration announced in March that Pennsylvania had beaten out Ohio and West Virginia to convince Shell to build the multi-billion-dollar plant in Monoca, Pa., in Beaver County west of Pittsburgh. The plant takes ethane - one of the chemicals that's increasingly harvested in the hydraulic fracturing, or fracking wells in the Marcellus Shale region of Pennsylvania and across Appalachia - and breaks it down, or "cracks" it, to make (no "The Graduate" jokes, please) plastics.
In Corbett's crusade to turn Pennsylvania into Texas, the Shell plant was his mechanical bull. It will mean jobs in an economically depressed region; state officials say there could be 7,000 direct hires and, indirectly, 20,000 jobs created, although critics say estimates of job gains related to the fracking industry are typically hyper-inflated. In return, the state created a special 15-year Keystone Opportunity Zone tax break, and promised infrastructure funds from the new fee on drilling.
Nothing was said about this additional cash giveaway estimated at $67 million a year for the 25 years - a measure tucked inside an obscure tax code bill due for legislative action in a few weeks.
Why do this? In March, Corbett - chronically short of ideas when it comes to funding classrooms - told reporters that for a mega-corporation dangling jobs over Pennsylvania "[w]e would be open to considering just about anything." On Monday, a Corbett economic development aide insisted to the Inquirer's Joseph N. DiStefano that this new tax credit is aimed not just at Shell but to encourage other manufacturers using ethane to locate here.
But Ward, the budget critic who looked at the draft legislation for the first time on Monday, said it appears to be targeted toward Shell's ethane plant, and she noted that with all the other tax breaks that the oil giant is getting, it's more likely that Shell would sell the tax credits to other companies for cash - a possibility that a state official acknowledged to the Inquirer.
Of course, you could also make that case that it was Shell's money - indirectly - that helped make Corbett governor in 2010. How so? In May 2010, Royal Dutch Shell paid $4.7 billion for Pennsylvania native Terry Pegula's oil-and-gas company East Resources - roughly the same time that Pegula was giving $305,000 to Corbett's campaign, making him one of Corbett's largest donors. And Shell continues to spend heavily on lobbying Harrisburg - some $277,323 just in 2011, while the ethane plant deal was being hatched.
Still, Monday's report stunned many folks and set the Twittersphere on fire - especially among environmentalists. "My first reaction was somewhere between 'shock and awe' and disgust," said David Masur, director of Philadelphia-based PennEnvironment. Masur and others do think, however, that Monday's widespread publicity may have killed the idea - in a year in which nervous legislators are facing an anxious and angry Pennsylvania electorate.
The greatest irony may be that the news comes days after reports that Corbett is under pressure to re-tool his image, with critics calling his budget cuts for schools and for the poor heartless, and portraying the governor as "The Tin Man" from the Wizard of Oz. Now you have to wonder if "The Scarecrow" would be a better fit, since this Big Oil cash giveaway is so politically tin-eared you have to ask what's happened to Corbett's brain as well.
- Good for you on the research. Will Bunch and the rest of Liberals and the environmentalist are always against jobs and economic growth. Will and the Bunch of no growth liberals will always be opposed to growth.
— Bob Northeast - I'd rather loose them to another state. I'd rather invest almost two billion dollars in our schools.
— JoeinSouthPhilly - There is no money for education. And Shell isn't getting money that would otherwise go to education. No wonder people don't get it. Shell gets tax credits based on their revenue. For example, when Shell makes $5 Billion, instead of paying $1 Billion in taxes they pay $.5 Billion. The state isn't giving them anything, Shell gets to keep more of what they earn in return for building up a large business in Pennsylvania. Or we could say "No!" and Shell sets up shop just on the other side of the river in West Virginia and they get all the benefits (jobs, tax revenue, etc.) — phillycaster
Comment removed.- Comment removed.
- David Axelrod will tell us where it is appropriate to build a methane processing plant.— Mr. Smith
- Comment removed.
- Every corporation in the state pays taxes. If they are relieved of paying taxes, it's a giveaway. There is zero chance that this will produce jobs in Pennsylvania. If that was the goal, let them write the costs of every job they create in Pennsylvania off of their taxes? This deal is set up for Corbett's personal political career benefit AT THE EXPENSE OF RESIDENTS OF PA. Corbett gives away hundreds of millions and he gets a campaign contribution as a kickback. It couldn't be more clear. — MikeP
- Comment removed.
- Ok. Put your money where your mouth is. Hold your breath until these jobs start to magically appear courtesy of the this tax break. 10 years of the bush tax breaks and where did that get us??? Plus if we have a true gas natural resource, wouldn't you think Shell would be willing to pay some taxes for it??? Wouldn't be more companies lined up to tap into our gas resource and willing to pay taxes to do so???
— Tzammy - This is not a tax break it is a credit. Shell has to first spend $1.5 billion to construct a plant. They receive nothing until they are profitable. If they receive the credits (spread over 25 years), it is only after they pay their suppliers, contractors and employees. The taxpayers give them nothing. We do however agree to give them a partial credit on the state tax that they owe after they spend hundreds of millions annually. This is all rather simple, we give them an incentive to invest in our state and creat jobs. If they are successful, we all win. If they fail, we owe them nothing. — BusinessOwner1
- Tax breaks would not be necessary if the tax code was not so complex— Joe Gonnelli
- I just moved to PA. Where's my tax credit? II caused at least 2-3 new jobs.— Jeffritoe
- Well done Guv!
It is a beautiful thing to watch when a reclusive republican drone gives billions away while our schools are deplorable and thousands go hungry every day in PA.
This guy needs to be Vice President! Vote Romney/Corbett to completely destroy the middle class, who needs em?— jimd98 - I get the distinct impression from the other comments that Shell can drill for ethane just about anywhere they please. Yet my brain is finding it hard to believe.— JoeinSouthPhilly
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