Ohio Gov. Bob Taft is to sign into law today in Maumee a bill that gives state tax breaks to investors and plants that make a gasoline additive from corn that is called ethanol.
Supporters have hailed ethanol as a way to become less dependent on foreign oil, create a new market for Ohio-raised corn, and promote cleaner burning fuels.
“A practical answer to all three challenges lies right before our eyes, in the fertile farm fields of Ohio,” Fred Dailey, director of the Ohio Department of Agriculture, wrote in support of the bill.
Ohio residents will be eligible for $5,000 in state tax credits over three years for every $10,000 they invest in farmer-controlled ethanol plants. Plants will be exempt from state and local taxes on equipment and buildings that were financed with Ohio Air Quality Development Authority bonds.
Plans are under way for several ethanol plants in Ohio, but none is built. The only commercial ethanol plant in the state's recent history, South Point Ethanol Co. in southern Ohio, closed in the mid 1990s.
Mr. Dailey called Ohio the largest corn-producing state without an ethanol plant. Ohio often is the sixth largest corn state, based on annual production, according to the U.S. Department of Agriculture.
The state uses more ethanol - 200 million gallons a year - than any state but Illinois, Mr. Dailey said.
He is to introduce Governor Taft to about 70 agricultural leaders at The Andersons, Inc., conference center today. The bill signing was scheduled for today because it is Ohio Agriculture Day. Northwest Ohio is one of the largest corn-producing regions of the state, and several ethanol plants are being considered for the area.
“For the people that just want to invest $10,000, I think it will be a big incentive,” said Bill Cleland, Jr., who farms 1,500 acres near Hicksville, in Defiance County, and is president of Northwest Ethanol LLC.
To qualify for the tax credit, the plant must be “majority owned by Ohio farmers,” although the definition of that was not in the bill and a state agriculture agency spokesman said it would be determined case by case.
That means investors won't know for sure whether they will be eligible for the credit until a five-member state board considers their plant's application.
To take full advantage of the credit, investors would need an Ohio taxable income - after all deductions - of at least $46,300 a year, said the Ohio Department of Taxation.
Ohio Sen. Larry Mumper (R., Marion), a bill sponsor and farmer who is to speak at the bill-signing, estimated the credits will cost cash-strapped Ohio hundreds of thousands of dollars in taxes over 10 years. But he said spinoff business from construction and other projects would more than make up for the loss. His district includes Sandusky, Seneca, and Wyandot counties.
The bill was passed as an emergency measure, so the law will go into effect immediately after it is signed.