Northeast Pennsylvania lawmakers led the charge to enact a local resource tax credit for manufacturers who use methane (natural gas) to make fertilizer, fuel, and other products. If approved by Governor Tom Wolf, thousands of workers and their families will owe a great debt of gratitude to state Sen. John Yudichak (I-Luzerne/Carbon) and state Rep. Aaron Kaufer (R-Luzerne).
The new bill revisits legislation Governor Wolf vetoed on March 27, 2020. However, in the veto message he indicated that he was supportive of the concept but wanted alterations to several provisions. These changes were made in the amendment that Senator Yudichak offered to House Bill 732, which passed both chambers.
The bill won broad bipartisan support, clearing the Senate on Monday with a 40-9 vote and the House on Tuesday with a 163-38 vote. During floor debate, legislative supporters said Wolf has agreed to sign the bill into law.
A PMA analysis of the impact of the legislation (www.pamanufacturers.org/nepanatgas) showed that during the 30-month construction phase of four manufacturing plants that use the credit (the max under the legislation) over $600 million in wages will be paid to workers, and over 4,400 new jobs will be created at the plants as well as thousands more in down-the-line businesses.
“Our struggling economy needs new industries to invest in Pennsylvania and working families in northeastern Pennsylvania deserve a fair shot at securing good paying jobs,” Yudichak said in a statement released after passage of the bill. “The Local Resource Manufacturing Tax Credit, which will set the stage for transformative economic growth across a wide swath of industries from the construction trades to manufacturing and energy jobs, is the product of a thoughtful, bipartisan compromise with Governor Tom Wolf and the legislature that proves government can deliver on the promise of economic opportunity for all.”
Kaufer said that the legislation encourages manufacturers not only “to establish roots here in Pennsylvania, but to generate large revenues, boost our region’s economy, and provide vast opportunities for job growth.”
“Again,” he said, “this is a once-in-a-lifetime chance for Pennsylvania, especially the northeast region, as it will also allow us to use cost-effective, accessible natural gas to compete with overseas manufacturers.”
PMA President & CEO, David N. Taylor welcomed the passage of the legislation as bringing much needed good economic news for Pennsylvania.
“While making new products like fertilizers and fuel, these manufacturing facilities will create high-value jobs, expand the use of Pennsylvania energy, and attract related industries and additional investments, all of which will accelerate our economic recovery,” Taylor said. “This remarkable effort has brought together Pennsylvania industry – both labor and management – in our shared commitment to a pro-production, pro-jobs, pro-growth agenda for our commonwealth.”
Starting in 2024, the bill allows four manufacturing plants to divide 25 years of tax credits up to nearly $26.7 million a year. Each plant can draw a maximum credit of just under $6.7 million.
The legislation is modeled on a 2012 bill that enticed Shell Chemical Appalachia LLC to build the Pennsylvania Petrochemicals Complex in Beaver County, currently the largest construction project in North America. “Construction alone on that project has transformed the region, bringing additional investments in education and businesses and improving the quality of life in this community,” PMA and the Pennsylvania Chemical Industry Council said in a joint statement urging support of the Yudichak/Kaufer legislation.
The Marcellus Shale formation in northeast Pennsylvania yields abundant amounts of natural gas that is “dry,” meaning it is almost exclusively methane. Methane is used in natural gas synthesis manufacturing plants to create hydrogen and nitrogen in the form of ammonia and urea; two essential products in modern manufacturing. Ammonia in a gas or liquid form is used by industry for petrochemicals, life sciences, and fertilizer. Urea is processed into fertilizer and used to manufacture diesel exhaust fluid; a necessary product to reduce NOx emissions.
The economic multiplier effect of manufacturing plants is unrivaled. The Manufacturing Institute, the education and workforce arm of the National Association of Manufacturers, reported that every dollar in final sales of manufactured products supports $1.33 in output from other sector – the largest multiplier effect of any industry sector.
“In addition to direct jobs created, entire new industry clusters will be created,” Yudichak said on Monday on the Senate floor. “It will allow regions like northeast Pennsylvania to achieve a level of generational prosperity and unprecedented economic growth.”