ST. PAUL -- Farmers smiled Tuesday as a Minnesota House committee agreed with senators that ethanol subsidies should not be eliminated this year.
"It's good news," ethanol lobbyist Gerald Seck said. "It is a move in the right direction."
The House Agriculture and Rural Development Finance Committee decided to cut nearly $5.4 million from state payments to ethanol cooperatives. But that was a far cry from the nearly $27 million Gov. Tim Pawlenty wanted chopped to balance the budget.
"There's a lot of little pieces of money floating around," Rep. Jim Knoblach, R-St. Cloud, said about where the House found money to keep ethanol subsidies.
Among the places the House located money was in unspent funds and money that had been appropriated but no longer is needed, said Knoblach, chairman of the House Ways and Means Committee.
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Farmer-owned cooperatives that had received payments of 20 cents per gallon of ethanol would receive 16 cents under the House bill. Pawlenty would have spiked the next three quarterly payments entirely, while the Senate wants to maintain full payments to all ethanol co-ops except a controversial one in St. Paul.
Pawlenty started the ethanol debate last week when he released a plan to fill a $356 million hole in the current budget and leave some money in reserve.
The debate was accentuated when hundreds of farmers protested the cuts at the Capitol Thursday.
Knoblach said the House will closely follow Pawlenty's $468 million budget-balancing plan, except for the ethanol portion.
Pawlenty wrote a letter to lawmakers saying they would have to act on the budget plan by the first week in February or he would be forced to make unilateral budget cuts.
Because most ethanol payments were retained, Rep. Fran Bradley, R-Rochester, said his Health and Human Services Finance Committee is looking at deeper cuts.
Bradley would save $2.2 million by killing the Cover All Kids health-insurance program. He said children without insurance should be covered by the long-running MinnesotaCare program.
While the House committee mostly spared the ethanol program, other farmer-related cuts were approved: eliminating a wide variety of grants and cutting 25 percent of the Crookston-based Agriculture Utilization and Research Institute budget.
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Rep. Elaine Harder, R-Jackson, said the farm cuts are mild, under the circumstances. The new chairwoman of the agriculture finance committee said ethanol plants -- which make a gasoline additive -- should be able to survive the cuts.
The lead Democrat on Harder's committee said the cuts still are unfair.
"Ethanol has been a success story for rural Minnesota," Rep. Al Juhnke said. "But it seems the administration and GOP lawmakers want to cut the legs out from under it."
The Willmar legislator said even Republicans' smaller reduction could force one or two cooperatives to close. Juhnke led Democrats on Harder's committee in voting against the budget bill, which passed 9-5.
Rep. Paul Marquart, DFL-Dilworth, voted against the ag bill in committee, but said he hopes funding for the research institute improves by the time the full House votes on the measure.
"It comes down to a matter of fairness," said Marquart, who said rural Minnesota took too hard a hit in Pawlenty's budget-balancing plan.
Readers can reach Forum reporter Don Davis at (651) 290-0707
