There’s a cardinal rule of presidential primary politics: don’t knock ethanol in corn-state Iowa.
But that didn’t stop former Gov. Tim Pawlenty from telling an audience there he’d phase-out ethanol subsidies if elected president.
“Even in Minnesota, when we faced fiscal challenges, we reduced ethanol subsidies,” he said during his announcement Monday that he’s running for president. “That’s where we are now in Washington, but on a much, much larger scale.”
Pawlenty cut state ethanol subsidies – but he left out that he also promised to pay them back later.
Minnesota ethanol producers have been enjoying subsidies since 1987. For a long time, they got 20 cents from the government for every gallon of fuel they produced. The subsidy was meant to jumpstart small, farmer-owned operations.
When Pawlenty took office in 2003, the state was facing a budget shortfall. Pawlenty cut $20 million in ethanol subsidies that year – roughly three-fourths of the $26.8 million in payments slated to go out – and followed-up with a plan to reduce the payments to 10 cents per gallon in the coming biennium.
Pawlenty’s plan didn’t fly with rural lawmakers. Ultimately, he and the Legislature agreed to draw down the subsidy to 13 cents per gallon through fiscal year 2007, and pay producers the difference later on. According to a Legislative Auditor’s report, the state paid out $50.5 million in so-called deficiency payments during the last biennium.
Furthermore, the program was always slated to end in 2010, so the ethanol subsidies would have halted regardless of Pawlenty’s actions (though deficiency payments are still trickling out.)
Though Pawlenty wanted to cut ethanol subsidies, he also pushed to expand the state’s requirement that every gallon of gasoline be blended with 10 percent ethanol. In 2005, the state approved Pawlenty’s plan to require gas be mixed with 20 percent ethanol by 2013, a government mandate that’s bolstered the market for the corn-based fuel.
It is true Pawlenty cut Minnesota ethanol subsidies, but he glosses over the fact that ethanol producers eventually got their money anyway.
That’s enough to make this claim misleading.
YouTube.com, Tim Pawlenty in Des Moines – 2012 Announcement Speech, May 23, 2011
Minnesota Public Radio News, Lawmakers resist Pawlenty’s proposal to cut ethanol subsidies, January 16, 2003
Minnesota Public Radio News, Ethanol bill nears crucial test, by Laura McCallum, March 16, 2005
Minnesota Department of Energy, Gasoline Pricing Facts for Consumers, accessed May 25, 2011
Office of the Legislative Auditor, Biofuel Policies and Programs, April 2009
The Minneapolis Star Tribune, Cuts in the pipeline: Subsidies keep ethanol industry from fizzling, by Joy Powell, March 11, 2003
The St. Paul Pioneer Press, Session out but not over, by Patrick Sweeney and Bill Salisbury, May 20, 2003
Interview, Ralph Groschen, Senior Marketing Specialists, Minnesota Department of Agriculture, May 24, 2005
The Humphrey School
MPR News is hosting an online debate about ethanol. Find it here.