Ethics questions raised over lawmakers getting biofuel tax credits

Friday, May 2, 2008 | 4:49 p.m. CDT; updated 2:07 p.m. CDT, Monday, July 21, 2008

JEFFERSON CITY — As farmers, John and Mary Quinn have received more than $200,000 in state tax credits for investing in ethanol factories, biodiesel plants and various agricultural cooperatives.

As a state legislator, Quinn has supported measures mandating the use of biofuels by Missouri motorists and directing tens of millions of dollars of state subsidies to ethanol and biodiesel producers.

A conflict of interest?

Not according to the Legislature or the Department of Agriculture.

Although by far the biggest beneficiary, Quinn is just one of about 20 past or present state officials whose households have received more than $400,000 in tax credits for investing in value-added agricultural initiatives such as alternative fuels, according to state records provided to The Associated Press under a Sunshine Law request.

Some of those officials benefited after shepherding the tax breaks into law. Others, such as Quinn, took advantage of the tax credits both before and after they were elected to office. And some of those officials led the charge to make Missouri just the third state to mandate that ethanol-blended fuel be sold at all gas stations.

Although at least 15 states offer incentives to ethanol plants, Missouri's program is broader because it also offers tax credits to the individual farmers who invest in those alternative fuel plants or in other value-added agricultural initiatives.

The intermingling of personal and official actions involving biofuels has led to a backlash at the Missouri Capitol.

Senators have endorsed a measure requiring state elected officials to divulge whether they or their family members have received tax credits when filing annual financial disclosure reports with the Missouri Ethics Commission. A similar bill has been backed by a House committee.

State Treasurer Sarah Steelman — a Republican candidate for governor — has taken a hard line. She has banned ethanol or biodiesel plants from receiving financial incentives through her office if even a single investor is related to an elected state official or department director.

By contrast, the agriculture department doesn't deny tax credits to elected officials unless they own at least 10 percent of the ethanol or biodiesel plant.

Quinn isn't a 10 percent stakeholder in any of the 11 agricultural ventures for which he and his wife have received state tax breaks. Yet the Quinns have received a total of $207,137 in such tax credits from 2000, the year before he first won election, through last year.

During that time, Quinn has voted for state budgets allotting about $80 million of incentives to ethanol and biodiesel plants. Some of those payments ended up going to facilities in which he is part owner. He also backed the 2006 law mandating that gas stations sell an ethanol-blended fuel whenever it is cheaper than traditional gasoline.

Quinn acknowledges the tax credits amount to "a lot of money," but he adds: "I believe in Missouri agriculture and biofuels and other value-added companies that I've invested in."

"This is my livelihood," said Quinn, R-Chillicothe. "I was a farmer before I was a state legislator, and continue to be a farmer. I really don't feel that farmers should be held to a higher percent of scrutiny than what other legislators are."

Like many of the legislator-farmers getting state tax breaks, Quinn justifies them by noting that others also support legislation related to their private-sector jobs.

Lawmakers who are medical professionals, for example, have been some of the biggest backers of bills revamping the state's Medicaid system and increasing state Medicaid payments to health care providers. Lawyers in the Legislature helped craft laws affecting the judgments that can be awarded in personal injury lawsuits.

House rules excuse members from voting on bills if they have "a direct personal or pecuniary interest" in them, but leave such decisions to each lawmaker. The Senate has no rule defining when it would be a conflict for lawmakers to vote on bills. Yet some lawmakers do occasionally excuse themselves from votes.

For example, Democratic Reps. Wes Shoemyer, of Clarence, and Terry Witte, of Vandalia, abstained from voting on the 2006 ethanol mandate, because they are ethanol investors.

Witte received $2,611 in tax credits that year for investing in a Laddonia ethanol plant.

Shoemyer, now a senator, has received $12,680 in state tax credits for investing in a Macon ethanol plant and Mountain View pork processing facility from 2000 — the year he first was elected to the House — through now. Shoemyer said he also is an investor in a new biodiesel plant for which he likely will receive an additional state tax credit.

Rather than distancing themselves from taxpayer-backed agricultural facilities, some legislators who are farmers insist it is their responsibility to invest in the cooperatives. They note that not all of the ventures have made money, and the tax credits help offset some of that gamble.

"A lot of these businesses are very, very risky businesses," said Sen. Bill Stouffer, R-Napton. "So when you're trying to bring jobs to the rural areas and add value to rural products, I think if you're going to be a leader in rural areas, you need to put your money where your mouth is."

Stouffer has done that. He's received $23,940 in tax credits for investing in a meat-processing plant, specialized grain cooperative and biodiesel plant. Though most of that occurred before he was elected to office in 2004, Stouffer received the biodiesel tax credit last year as he was sponsoring a bill to mandate that Missouri gas stations sell biodiesel fuel. Stouffer is pushing a similar bill this year, though it has stalled in the House.

Like many of the lawmakers who have benefited from agricultural tax credits, Stouffer believes Steelman's zero-tolerance policy is too rigid. But he acknowledges that the Agriculture Department's threshold for a conflict of interest may be too high.

Before Missouri's legislative session ends May 16, some of those lawmakers may try to overturn Steelman's standard by putting into law a statewide conflict of interest threshold of anywhere between 1 percent and 10 percent ownership.

Stouffer also has supported legislative efforts that would shed a brighter public light on his taxpayer-subsidized investments.

A provision added to an agriculture bill in the Senate would require legislators and statewide elected officials to disclose any state tax credits claimed by themselves, their spouses or dependent children when filing personal financial reports with the Missouri Ethics Commission. A similar bill was endorsed by a House committee earlier this year.

Both versions came from members of the Joint Committee on Tax Policy, which had trouble getting a list of lawmaker recipients of tax credits from the Agriculture Department. Committee members ultimately resorted to an open-records request, just as the AP did.

Committee chairman Sen. Brad Lager, a Republican candidate for treasurer, says he's not claiming any of his colleagues acted inappropriately by taking biofuels tax credits. In fact, he believes Steelman's no-tolerance policy is too tough.

"If these guys are investing their money in their plants and being part of the value-added agriculture process, wonderful," said Lager, R-Savannah. "The state of Missouri is heavily subsidizing that, and I just think it's good government to put that information on the table."

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