Get rid of ethanol subsidies, state's auditor says
Minnesota should get out of the business of subsidizing the state's ethanol industry, the Legislative Auditor's office said today.
By BOB VON STERNBERG, Star Tribune
Last update: April 17, 2009 - 9:18 AM
http://www.startribune.com/local/43173372.html
Minnesota should get out of the business of subsidizing the state's ethanol industry, the Legislative Auditor's office said today.
In a report on the sometimes-controversial program that pays producers of corn-based ethanol, the office found that the subsidy program fails to maximize the energy and environmental benefits of the fuel.
The money, $93 million paid to producers over the past five years, could be better spent on other programs that do a better job of reaching those goals, it concluded.
Plus, at a time of crushing state budget deficits, the $44 million expected to be spent on the program through 2012 could be redirected to other uses, according to the report.
"Legislators should look carefully at this program in light of the current budget deficit and the state's goals of reducing energy consumption and greenhouse gas emissions," the report states.
Legislative audits are strictly advisory and legislators are not bound to follow their recommendations.
In a letter sent to the auditor's office last week, Agriculture Secretary Gene Hugoson pushed back against the recommendation to end the subsidy because of the "profoundly positive impact" the ethanol industry has had on the state's economy.
In 2007, he wrote, the industry's economic impact on the state totaled $2.27 billion, employing 4,300 Minnesotans.
However, the auditor's report said the subsidies represent only slightly more than 1 percent of the industry's sales and that producers earned profits of $619 million during the past five years.
The report also said the state should give tax breaks to ethanol plants only if they need it and are able to offer energy and environmental benefits. In the past, it said, the state has used incentives through its Job Opportunity Building Zone program for ethanol plants that might not have needed it.
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