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Saturday, March 11, 2006

Taxpayer's League on State of the State

Costing out the State of the State address...
Governor Pawlenty’s fourth State of the State address was a bit of a surprise. In addition to quoting America’s most overrated President (twice!), Governor Pawlenty held up the city of Benson, MN as a center of innovation in Minnesota’s economy. We beg to differ. The Governor cited an Ethanol plant and a turkey-dropping fueled power plant as a great examples of innovation. Here are the real facts: both of these "innovative businesses" have gotten the benefit of huge subsidies from the State and the Federal governments, and their customers are mandated to buy their products.
The state’s biomass energy mandate passed in 1994 requires Xcel Energy to generate or purchase 125 megawatts of biomass electricity. Though the turkey dropping burning plant fulfills part of this mandate, electricity from the turkey plant is so costly (currently priced at over 9 cents per kilowatt-hour (double the rate of regular electricity), it requires a massive subsidy from ratepayers estimated at $500 million over the life of the 22-year contract, or $23 million a year!.
The story with the ethanol plant is the same. The State mandates that all gasoline contain 10% ethanol, gives a 20 cent a gallon subsidy and the federal government adds a 51 cent a gallon subsidy on top of that! That works out to another $31 million a year in state and federal subsidies. In addition, the Governor has proposed doubling the mandated Ethanol content of gasoline to 20%.
Wouldn’t you like the government to pay you to produce a product, and then force consumers to buy it whether they want it or not? Sounds like a great business model!
This is a great example of innovation?

But thanks for the seven words about putting a cap on property taxes. That was swell.

Oink..... Oink...... Pork!