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Missouri Alt-Fuel Credits Raise Conflict-of-Interest Questions

May 05, 2008

JEFFERSON CITY, Mo. --- An Associated Press investigation has revealed that about 20 past or present Missouri officials have received more than $400,000 in tax credits for investing in alternative fuels such as ethanol or biodiesel. Some of these officials wrote the tax breaks into law or voted to award millions of tax dollars to energy companies in which they were invested.

According to the AP, some of the officials began taking the tax breaks before they were elected and continued doing so after taking office. But records show that others used the breaks only after voting on them.

The appearance of a conflict of interest has led to new calls for greater transparency in such matters. Senators have backed a measure requiring elected officials to reveal on financial-disclosure reports whether they or their relatives received tax credits. A House committee has backed a similar bill, the AP reported.

"If these guys are investing their money in their plants and being part of the value-added agriculture process, wonderful," Sen. Brad Lager, a Republican candidate for treasurer, told the AP. "The state of Missouri is heavily subsidizing that, and I just think it's good government to put that information on the table."

Legislators taking advantage of the breaks have defended their actions, asserting that they are as entitled to the tax credits as any other taxpayer.

Republican Rep. John Quinn and his wife began taking advantage of the tax breaks before he was elected to the House in 2001, the AP reported. After his election, they received more than $170,000 in tax credits for investing in ethanol factories, biodiesel plants and agricultural cooperatives. During that same period, Quinn voted to award $80 million in incentives to ethanol and biodiesel plants. Some of that funding was directed to facilities in which he is part owner. He also supported a 2006 law requiring that gas stations sell an ethanol-blended fuel.

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

Quinn added that other lawmakers often vote on legislation related to their private-sector jobs.

House rules excuse members from voting on bills if they have "a direct personal or pecuniary interest" in them, but such decisions are left to individual lawmakers. Only two lawmakers with investments in ethanol plants excused themselves from voting on Missouri's ethanol mandate.

Some legislators who are farmers argue that it's their responsibility to invest in alternative fuels.

"A lot of these businesses are very, very risky," Republican Sen. Bill Stouffer told the AP. "So when you're trying to bring jobs to the rural areas and add value to rural products ... you need to put your money where your mouth is."

Stouffer drew $23,940 in tax credits for investing in a meat-processing plant, specialized grain cooperative and biodiesel plant. Most of that happened before he was elected in 2004, but he did receive the biodiesel tax credit last year while sponsoring a bill to require biodiesel fuel at gas stations. Stouffer is backing similar legislation this year.

At least 15 states offer incentives to ethanol plants, AP reported. However, Missouri's program is broader in scope because it also offers tax credits to individual farmers who invest in alternative fuel plants or in similar agricultural initiatives.

State Treasurer Sarah Steelman — a Republican candidate for governor — has prohibited 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. But the state Agriculture Department does not deny tax credits to elected officials unless they own at least 10 percent of the ethanol or biodiesel plant, AP reported.


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