In the middle of a pandemic and a recession, Gov. Tom Wolf is expected to approve a generous gift of a $670 million tax credit to the petrochemical industry.
The new tax credit is intended to boost demand for natural gas — which has not kept up with the booming supply — by giving up to $26.7 million a year to no more than four facilities (maximum of $6.7 million each) that turn natural gas to fertilizers, ammonia, and industrial chemicals that are used in plastics — similar to the Shell cracker plant in Beaver County. The tax credit is authorized for 25 years starting in 2024.
In return for the massive investment that further entrenches Pennsylvania in a pollution-generating future for the next quarter-century, each factory will need to provide 800 jobs. These include the temporary jobs that will disappear once the construction is complete.
In 2012, Pennsylvania approved $1.65 billion in tax credits for the Shell cracker plant. After its construction is complete, it is expected to create 600 permanent jobs. The prospects for plants supported by the new tax credits are even less: A study of the Pennsylvania Manufacturers’ Association, a trade group that supported the bill, estimated that each plant will create only 150 permanent jobs.
Wolf vetoed a similar bill in March, but, after minor adjustments, he struck a backroom deal with General Assembly Republicans and came out in support of the measure. Wolf forgot to ask for anything in return.
According to groups such as PennFuture and the Clean Air Council, the Pennsylvania environmental community was cut out of the negotiations between Wolf and Republicans. A coalition of 62 conservation, faith, business, and environmental groups throughout the commonwealth sent a letter to legislators asking them to vote no. The bill passed in both chambers.
The centerpiece of both of Gov. Wolf’s campaigns was a severance tax on the natural gas industry. His proposal never got serious consideration in the legislature. Instead, he will be signing a tax credit — the literal opposite — that will both cost Pennsylvania’s taxpayers hundreds of millions, and make any effort to reach Wolf’s own goal of reducing carbon emissions by 80% by 2050 nearly impossible.
In return, Wolf didn’t get a higher minimum wage, gun control, another look at the severance tax, marijuana legalization, or anything else on his agenda. Instead, lawmakers are pushing to rush a constitutional amendment to limit the power of the governor.
The tax credit also comes on the heels of a grand jury report that called into question the safety and oversight of the state’s fracking industry.
Wolf still has time to rethink his support of this boon for the petrochemical industry — and veto the bill when it hits his desk.