Guest column/Education falls prey to fossil fuel economics
Recent press reports about the planned cracker plant in Belmont County claim an “economic development agreement” has been reached between two Asia-based companies, the PTTGC Petrochemical Complex and the Shadyside School District. The schools would receive $38 million from PTTGC, which is proposing to build an ethane cracker plant in Belmont County. Initially “$8 million would be dispersed during the four years of construction and then $2 million would be dispersed annually for the next 15 years.”
In return, the companies would receive a 15-year property tax exemption for the plant through a state enterprise zone program. No mention was made as to how much money this exemption would save the companies during the 15-year timespan, or if the agreed-on payments are guaranteed or based on company profits.
Ohio’s recent property tax exemption for the PTTGC cracker is not the first time Ohio has used subsidies to encourage this plant to locate in our region. JobsOhio, a private nonprofit economic development agency, gave the project $14 million in 2017, $30 million in 2019, and $20 million this February. JobsOhio is funded through sales of alcoholic beverages in Ohio.
Ohio is not alone when it comes to using subsidies such as these “tax incentives” to entice companies to their states. Pennsylvania passed the “Keystone Opportunity Act” in 2012, which exempted the Shell Cracker plant, being constructed in Monaca from all “corporate net income taxes and property taxes for 15 years.” In return, the company must invest a billion dollars and create at least 400 new permanent full-time jobs. Pennsylvania also passed the Resource Manufacturing Tax Credit or Act 85. This gives Shell a “tax credit of 5 cents for every gallon of ethane it buys to manufacture ethylene, provided it creates 2500 full-time equivalent jobs.”
The International Monetary Fund found that direct and indirect subsidies for coal, oil and gas in the USA for the year 2015 topped $649 billion. This is 10 times what the government spends on education in our country. Petrochemical industries come into our communities promising economic prosperity while bringing toxic air pollutants, such as butadiene, benzene, formaldehyde and xylenes as well as water pollutants.
As with all extractive industries, their externalities are borne disproportionately by poor communities. The industry targets struggling school systems, promising financial support and offering free workshops, curriculum materials and classroom supplies. As a former teacher in a poor rural school system, I have seen the “favors” offered by fossil fuel public relations departments. These materials dismiss fossil fuel industry’s contribution to climate change while downplaying the environmental hazards of fossil fuel extraction and use.
According to a study by the Center for Public Integrity, industry indoctrination in our schools can start as early as the first grade. This is evidenced by the book “Petro Pete’s Big Bad Dream,” a pro-industry narrative. Ohio has a program that shows teachers how to “frack” Twinkies and a national fossil fuel educational program claims, “it’s too soon to tell if the earth is heating up, but a little warming might be a good thing.”
We Ohioans should not be placed in a position where securing funding for our schools involves allowing our educational system to be infiltrated with industry lies and our politicians to barter away our future and the futures of our children. We in Ohio have known for decades the necessity of finding other ways to fund our schools. In a 1997 case in Ohio, Justice Francis Sweeney said Ohio’s Constitution requires that the General Assembly “secure a thorough and sufficient system of common schools throughout the state.” In that case, it was also determined that “Ohio’s elementary and secondary public-school financing system violates Section 2, Article VI of the Ohio Constitution, which mandates a thorough and efficient system of common schools throughout the state.” Currently, Ohio’s school systems rely on property taxes, and as long as that happens, funding deals like the one struck between the PTTGC company officials and the Shadyside school system will be inevitable.
Can any agreement with the fossil fuel industry be dependable for years to come? A few examples of the uncertainty of these agreements can be seen in other Ohio school districts (see Herald-Star Dec 23.) A December article in the Toledo Blade reported that the owners of the Nexus and Rover pipeline systems have filed separate requests with the Ohio Department of Taxation to decrease the valuation of their respective pipelines significantly between 30 and 50 percent. School districts depending on these taxes now must find a new source of revenue or pass costs onto voters via higher property taxes. Anita Lopez, the Lucas County auditor, said the Ohio Department of Taxation “had the audacity to order me to raise values on homeowners, while giving pipeline companies a break for brand-new assets.”
A similar article appeared in the Dec.18 edition of the (Lorain) Morning Journal. Because the Nexus pipeline was seeking a 38 percent reduction in value, the Firelands Local School District will see a $700,000 reduction in tax revenues and the Keystone Local Schools and Midview Local Schools will see a $500,000 deduction in tax revenues. A Feb. 28 article in The Press, a paper serving Lucas, Ottawa, Sandusky and Wood counties, quoted Wood County Auditor Matthew Oestreich, who said, “If the pipelines win their appeals to devalue the property, the difference will have to be paid back to them with interest.”
Shadyside schools need to consider a few more issues before banking on money from the proposed cracker plant. With the current pandemic affecting everything in our lives, including supply and demand of global goods, oil prices have sunk to the lowest price in more than 18 years. A March 18 Houston Chronicle article reported that “seven of the most active companies involved in fracking in Texas have already cut $7.6 billion from their budgets as a response to the oil price collapse.”
A recent report by the Institute for Energy Economics and Financial Analysis, “Ohio petrochemical project faces high risks and shaky outlook,” details the challenges now facing this project.
It cites the “sinking price of plastics” in a market that is already oversupplied due to “industry overbuilding and increased competition.” In addition, alarmed by the health and environmental effects of plastic pollution, the world is now stepping away from single-use plastics.
It is time Ohio finds a fair and reliable process to finance our schools, instead of making deals with polluters.
(Pokladnik, a resident of Uhrichsville, is an environmental scientist.)