Indiana Area School Board president Walter Schroth testified yesterday before the House Environmental Resources and Energy Committee, but his testimony was not focused primarily on education.
Speaking as a business owner and member of the National Federation of Small Businesses, Schroth warned of the dangers of moving forward with the Regional Greenhouse Gas Initiative- also known as “RGGI”- the controversial multi-state compact that Governor Tom Wolf is pushing for Pennsylvania to join.
Schroth told the committee about the effect RGGI would have on Indiana County’s economy, detailing the financial disaster to school districts and communities and the chain reaction of economic pitfalls if coal-fired power plants and their supporting businesses are shut down.
A member of DEP’s Small Business Compliance Advisory Committee, Schroth explained why they recommended against the state joining RGGI:
- DEP has not studied the impacts RGGI would have on small businesses, yet was asking the small businesses to approve the program.
- Second, RGGI would not reduce greenhouse gas emissions.
- Finally, with compelling numbers, Schroth showed how the county and the Homer Center, United, Armstrong, and by association Indiana school districts would suffer and maybe even have to close.
Schroth, who owns Schroth Industries in Indiana, emphasized that RGGI is a tax scheme program with no benefit to the environment, and a terrible effect on the economy.
HERE IS THE TEXT OF WALTER SCHROTH’S LETTER TO THE HOUSE ENVIRONMENTAL RESOURCES & ENERGY COMMITTEE
House Environmental Resources and Energy Committee
Walter A. Schroth
Schroth Industries, Inc. Indiana, PA
August 24, 2020
Good Morning.
I want to thank you for the opportunity to speak today on the impacts RGGI will have on
small business. I am the third generation owner of a small forest and wood products
company. Schroth Industries Inc can trace its roots back to when my grandfather started
cutting mine props in 1929 for the local coal mines. My father set up the wood treating
plant in 1970 to meet the increasing needs for treated timber for the mines that were
established to supply the mine mouth fed, coal fired power plants here in Indiana County.
They are the Keystone, Conemaugh and Homer City Generating Stations. I continue to
operate that treating plant supplying Rosebud Mining Company with their treated mine
timber needs. Seventy to 75% of my total annual revenues come from Rosebud. Schroth
Industries employs four full time employees and two part time office workers.
I currently buy my raw, untreated wood directly from two small, one medium and four
large local sawmills. These seven family owned sawmills would have a combined
workforce, including logging crews of 60 + people. These mills are to a greater or lesser
degree dependent on my purchases for their survival. While my purchases do not
consume 100% of their production, should Schroth Industries Inc not survive, at least one
and perhaps 3 of those sawmills would not survive either. In addition we support three
maintenance facilities, a plumbing supply house, an auto parts store, a local paint store, a
small community bank, a fuel and oil dealer, an independent accounting firm, and we
purchase our preservatives from a subsidiary of Koppers Corporation headquartered in
Pittsburgh. Our capitalist economic system has created an intricate interlocking web,
connecting small, independent, family owned businesses. When you break that chain, it
affects everyone in the chain.
As a member of DEP’s Small Business Compliance Advisory Committee, I, along with
the entire committee, have been briefed on the RGGI TAX proposal by the department. I
use the term tax because at the end of the first briefing that was my immediate reaction to
what was first presented. A fee is something you pay with the expectation that you will
get something directly in return. A tax is something you pay to a government entity with
no expectation of getting anything in return. With the RGGI proposal’s failure to
significantly change the global trajectory of green house gas emissions, there is no
realistic expectation of achieving the environmental improvements touted in the proposal.
During the SBCAC virtual meeting on July 22nd, a department representative gave the 3rd
presentation to the SBCAC prior to the committee taking a vote. I, along with three other
business owners or business representatives voted no on a 3 – 4 vote in moving the
proposal forward. I voted no for three reasons.
First, the proposed RGGI regulations were not ready for presentation to the SBCAC, as
there was no information presented on the impact the regulations would have on small
businesses. When challenged as to where that information was, the DEP’s representative
explained that they were in discussions with the DCED and had not yet determined the
impacts. It seemed incredulous to me that while we, as representatives of the small
businesses of the Commonwealth, were being asked to approve a new program that
would impact those businesses, there was no information presented on the impacts it
would have on them.
Second, the proposed regulations did not actually solve the problem. As has been
previously presented to this committee within 10 years the CO2 levels would essentially
return to current levels. Also, like we have already seen, the shuttering of other fossil
fuel fired power plants in the earlier RGGI states, which individually saw a reduction in
CO2, the demand for inexpensive power was not abated nor was it replaced by other
greener sources, but rather it was transferred to other states such as PA.
Manufacturing, one of the largest engines for creating true economic wealth, views
inexpensive energy as existential. In short, if you don’t have a source of stable
inexpensive energy, you don’t have manufacturing. I simply could not support a
proposed regulation that would shut down businesses in Pennsylvania and transfer their
product lines to plants in Ohio or West Virginia, where those states would continue to
produce fossil fueled powered electricity selling it back into Pennsylvania.
Third, the negative impact that the loss of better paying jobs and the shuttering of fossil
fuel fired plants would have on the local school districts. As the president of the Indiana
Area School Board of Directors (IASD), I can tell you that our district, like the 499 other
school districts in Pennsylvania, have been pummeled, and continue to be pummeled by
the impacts of the COVID pandemic. The loss of tax revenue due to the shuttering of an
electric generating plant would be disastrous. It would threaten their very survival. The
closing of the three coal fired power plants, located in, or bordering Indiana County,
Homer City, Keystone and Conemaugh, would devastate the Homer Center (HCSD),
United (USD) and Armstrong (ASD) School Districts.
As an example, HCSD receives $710,000 from the Homer City Plant in property tax
revenue, representing 12% of their tax base. It also receives $30,000 in direct EIT from
those power plant employees that live in the district. The $740,000 in total revenue
reduction equates to a 10% reduction in the total number of teachers employed by HCSD.
They also have $38 million in long term debt.
The USD would have a total reduction of $110,000 in direct annual revenues, while
holding $19 million in long-term debt. None of these figures include the impacts on the
school districts from the small businesses that support the power plants, and their
employees that live within their districts that will decline, layoff and/or go out of business
because of the impacts of RGGI. This would be true for any school district that houses a
fossil fueled power plant. Remember Indiana county is a very rural area. Those high
paying jobs cannot be easily replaced.
But what happens when the HCSD, which adjoins the IASD to the south, closes its doors
because it can no longer pay its bills — then what? Will the PDE take over the district?
Read – Rearranging the deck chairs on the Titanic after it hits the iceberg! Force a
merger with IASD? Who will pay their long-term debt? The IASD taxpayers? I DON’T
THINK SO. The consolidation would necessitate the closing of one or more buildings
between the consolidated districts and/or triggering a reconfiguration of the “new”
district. Who will pay for that? The IASD taxpayers, again? The Commonwealth?
Plancon? The same questions apply to USD as well. No one has considered these
unintended consequences. Are these costs part of the overall calculations made for
RGGI?
My wife and I are at retirement age. I turned 69 this past April. We only had one child.
Our son is a graduate from the University of Idaho with a BS in Wild Land Fire Ecology
and Management. He and his wife currently work for our company as they intend to
succeed us and continue to operate the wood treating plant.
Without the income from the coal mines, the real question for me is, whether I will have a
viable business to turn over to them. He is a sharp guy and has a strong work ethic. But
more importantly, his critical thinking skills are highly developed. In short he is an
excellent problem solver and is capable of running and operating the company now, or
for that matter someone else’s.
With all of the current uncertainties that we all are facing, and now this existential threat
from RGGI, we have delayed our retirement, as I can no longer assure my son that he
will have that viable business. The real tragedy is Pennsylvania is losing its younger
generations. If Schroth Industries fails to survive RGGI, our son and his young family
will move west as there is very little work for a Wild Land Fire Ecologist in
Pennsylvania. I will sell or more than likely scrap out the business and sell our holdings
here. We will move wherever he lives to be close to our grandson and his future siblings.
Thank you.
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