A bill that would provide an incentive for downstream developers to bring their business to the Commonwealth by way of significant tax breaks has been approved by both the state Senate and House of Representatives.
House Bill 1100 survived voting in both legislative chambers, achieving the necessary two-thirds of “yea” votes through a bipartisan effort. HB 1100 piggybacks off of the tax credit, Act 85, passed in 2012 which enticed Royal Dutch Shell to build its multi-billion dollar ethane cracker facility in Beaver County, Pennsylvania. The new bill would require:
· An investment of no less than $450 million into the development,
· Guaranteed creation of no less than 800 construction and permanent jobs, with construction workers being paid the state’s prevailing wage, and,
· “Good faith efforts” on the part of the developer to hire local laborers and contractors.
In exchange, the company would receive:
· A 47-cent tax credit per 1,000 cubic feet of natural gas purchased for use, up to 20 percent of their annual tax liability
The state Department of Revenue estimates that each plant utilizing this tax credit would save $22 million per year until the bill’s sunset date in 2050. In total, the DOR states that a plant could save $600 million in taxes during the credit’s lifespan.
HB 1100 is less strict than its predecessor, Act 85. Act 85 required $1 billion in prior investment, guaranteed creation of 1,000 jobs, and would rely on a different credit structure. Rather than using the unit of per 1,000 cubic feet of gas purchased, Act 85 credited 5 cents per gallon of ethane converted to ethylene, a building block of plastic that will be manufactured Shell’s plant.
Governor Tom Wolf has already expressed his intention to use his executive powers to veto the bill, but per Pennsylvania’s constitution, it could be overruled by the legislature if no votes are changed. However, given political pressures and party loyalty, it is unlikely that those Democratic legislators who voted in favor of HB 1100 would maintain their vote in the event of a gubernatorial veto.
Pennsylvania’s citizens are faced with a question: Does economic gain outrank environmental considerations? Proponents of the bill boast the economic benefit that such development, like Shell’s plant, would bring the state. Opponents cite environmental issues, such as climate change and the movement against the overuse of plastics in society, as reasons to keep such industry out of the state, as well as asking the question of why this credit does not extend to industries that do not use natural gas in their process.