Karen Heller: Pa.'s mission is to help energy companies: Who knew?

Posted: June 07, 2012

Friends, we've been going about being Pennsylvanians all wrong.

Here we thought the government's mission was to energetically serve us when, in actuality, it exists to energetically serve energy companies.

This week, Gov. Frackenstein, a man of few words yet so many business tax breaks, proposed giving Shell Oil $67 million in annual tax credits to build a petrochemical refinery, including a "cracker" facility that converts natural gas - we have a bit - into ethane for plastics.

This is not a one-year gift, mind you, but a tax treat for 25 years.

For those of you doing the math at home, that's $1.7 billion over a quarter-century.

Look, I'm not against tax breaks. I wouldn't mind one myself. I live in Philadelphia, where it's considered a privilege to do business. Every spring, as surely as the flowers bloom and the Sixers' playoff chances wilt, Mayor Nutter finds something new to tax while labeling it an initiative or an assessment or something.

Nutter does this to make up for wildly unequal property evaluations that may or may not be fixed in our lifetime, historically delinquent tax collection (including, at one time, from more than 1,000 deadbeat city employees), and, gee, less funding from a state prone to giving tax breaks to energy companies than funding to its largest city.

Which brings us back to Shell.

Those energy companies need zero incentive to do business here as we're swimming in natural gas.

Royal Dutch Shell is the second most profitable corporation in the world, last year earning $31 billion in profits. This year's first-quarter net profit was $8.72 billion.

Indeed, Shell might be the last corporation that needs a tax credit, especially in a state that this spring instituted means testing for food stamps and last year whacked $1 billion out of the education budget.

The petrochemical refinery complex is being promoted as creating 10,000 permanent jobs and 10,000 construction jobs, but those are just projections, all part of the sell to get state governments slobbering and making deals. Scheduled to open in 2017, the plant will be built in Beaver County in Western Pennsylvania, 35 miles northwest of Corbett's hometown of Pittsburgh.

Pennsylvania beat out Ohio and West Virginia, which were aggressive and open in offering tax incentives. West Virginia passed a law specifically to create a tax break for the facility.

Pennsylvania is a little more coy and sub rosa in its wooing, befitting the current government's closed-door style. What arrogance, to keep citizens out of the loop.

"Typically, the governor is being secretive about it," CapitolWire's Peter L. DeCoursey reported Monday. "He is trying to give away that much taxpayer money without telling anyone until the little-read and arcane tax code bill is enacted later this month."

The $1.7 billion proposal is on top of a previous tax break for the energy behemoth.

In February, a month before Shell announced the Pennsylvania deal, the legislature approved Corbett's expansion of Keystone Opportunity Zones, offering a tax break of 15 years, instead of 10, for companies that invest more than $1 billion and create 400 jobs in Pennsylvania.

Hmm, wonder which oil company this was meant for? The tax credits, said U.S. Rep. Mark Critz, would be "in the neighborhood of tens in millions of dollars."

Which makes it a beautiful day in Shell's neighborhood.

Forced to go public on Tuesday, Corbett defended the latest tax break while stressing that the plant is not a done deal, that if his $1.7 billion tax break isn't approved by the legislature, Shell might take all those jobs elsewhere.


Using fear and empty threats, always a lovely combo, he said: "Every signal we can send to Shell that we are serious about siting their facility in Beaver County as quickly as we can do so is obviously going to aid us in making sure that they're breaking ground here in Pennsylvania soon."

And that's how the Shell game is played.

Contact Karen Heller at 215-854-2586 or kheller@phillynews.com.

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