The Lead

Wolf vetoes multi-million methane tax credit, gas allies push for override

By: - March 27, 2020 1:04 pm

Governor Tom Wolf speaks during a press conference about Restore Pennsylvania and broadband internet access across the Commonwealth.

This story was updated at 1:48 pm with additional information.

Gov. Tom Wolf has vetoed a multi-million dollar tax credit for petrochemical manufacturing.

Wolf had promised the veto in early February as the bill passed the General Assembly, and followed up the promise even in the midst of his COVID-19 response.

“Rather than enacting this bill, which gives a significant tax credit for energy and fertilizer manufacturing projects, Wolf said in a veto message his office released Friday, “we need to work together in a bipartisan manner to promote job creation and to enact financial stimulus packages for the benefit of Pennsylvanians who are hurting as they struggle with the substantial economic fallout of COVID-19.”

The tax credit could only go to companies that invested at least $450 million and created at least 800 jobs while constructing and maintaining a plant that turns methane gas produced in Pennsylvania into fertilizer, methanol, or other finished products.

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Companies must also pay its workers the local prevailing wage to receive the credit.

Trade unions, the natural gas industry, and their General Assembly allies said the bill would spur economic growth in the state’s struggling northeast, which produces methane gas.

The argument gained additional urgency as construction ground to a halt and unemployment claims spiked due to the coronavirus-inspired economic slowdown.

But environmentalists and their allies assailed the proposal as another corporate giveaway to the fossil fuel industry, which could lead to further air and carbon pollution.

The bill passed both the House and Senate with a two-thirds, veto-proof majority, on the strength of broad bipartisan support. Despite working with a Republican-majority legislature for the past six years, Wolf has yet to have a veto undone.

Tax credit allies have already threatened to hold such a vote. It could be delayed due to temporary rules and bipartisan promises as lawmakers address the coronavirus pandemic.

“We will rally as a Commonwealth and beat back the coronavirus pandemic, and when we do it will be time to get Pennsylvanians back to work by overriding Governor Wolf’s veto,” Sen. John Yudichak, I-Luzerne, said in a statement Friday.

An override vote can be held anytime between now and the end of the legislative session in November.

In a statement, PennFuture, a state environment advocacy group, called for the General Assembly to back off a veto override.

Instead, PennFuture CEO Jacquelyn Bonomo asked to “work with our elected officials and labor unions on a sustainable economic development policy that doesn’t incentivize pollution and moves our state away from the boom-and-bust industries that have devastated our towns and cities for the last century.”

The Department of Revenue estimated that the credit could amount to up to $22 million a year in reduced taxes for a single facility.

At least one manufacturer, Connecticut-based Elis Energy, expressed interest in setting up shop in Pennsylvania to utilize the credit.

In neighboring West Virginia, another top natural gas producing state, Republican Gov. Jim Justice signed a similar tax credit to encourage petrochemical manufacturing Wednesday.

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Stephen Caruso
Stephen Caruso

Stephen Caruso is a former senior reporter with Pennsylvania Capital-Star. Before working with the Capital-Star he covered Pennsylvania state government for The PLS Reporter.