Blagojevich signs legislation to spur growth in Illinois corn and soybean industries by investing in ethanol and biodiesel fuels

DECATUR, ILL. - In an effort to boost the use of Illinois grown corn and soybeans as renewable energy sources, Gov. Rod R. Blagojevich today signed legislation that extends the state sales tax exemption on ethanol, creates a new tax credit for biodiesel fuels and sets up a new grant program to encourage construction of renewable fuel production and research and development facilities.

"Biofuels are good for our cars, good for the environment and good for America," Blagojevich said at a bill signing ceremony on the farm of Rick and Sharon White of rural Macon County.  "These fuels - made from corn and soybeans grown right here in the state's heartland - are a renewable resource and, unlike oil, it's something we don't need to import.  If we want biofuels to really take hold, farmers, factory owners and investors need to have confidence that biofuels aren't just a fad that will pass when oil prices drop."

To that end, the governor signed a bill that established the Illinois Renewable Fuels Development Program to provide up to $15 million a year in grants for financial assistance for the construction, modification, alteration or retrofitting of plants in Illinois that have a production capacity of at least 30 million gallons of renewable fuel per year.

There currently are five ethanol plants operating in the state with a combined annual capacity of 766 million gallons - the most of any state - and a dozen other production facilities being planned.  More than 300 million bushels of Illinois corn are used annually to process ethanol.

The governor noted that the future of ethanol appears bright with the federal government currently considering a standard that gasoline contain at least 10 percent ethanol.  Ethanol now makes up only 1 percent of fuel sold at gas stations and the new federal requirement could increase ethanol demand four-fold in the next few years.

With the expected increased demand for corn-based fuel, Blagojevich said the state is positioning itself to maintain its competitive edge in the market through the new grant program.  "We don't want to grow more corn for ethanol here only to send it to other states for processing - costing Illinois jobs," he said. 

For each new ethanol plant created by the new legislation - House Bill 46 - the Department of Commerce and Economic Opportunity estimates that local corn prices would increase by 5 to 10 cents per bushel and provide an average 13 percent annual return to farmers who invest in an ethanol plant.  Each plant is expected to generate about 40 full-time jobs and nearly 700 in the region.

Funding for the grant program is to be realized by changing the sales tax exemption on ethanol from 70 percent to 80 percent of the state's 6.25 percent sales tax.

At the same time, the governor's action on Senate Bill 46 - extends the sales tax exemption for ethanol, which was set to expire July 1, to 2013, and expands the exemption for the first time to biodiesel fuels.

"By securing the tax break on ethanol and biofuel purchases for the next 10 years, we are sending a message to farmers and business that biofuel is here to stay - so start investing in it," Blagojevich said.

The governor also signed Senate Bill 1212 to clarify and expand the projects covered by the state's Prevailing Wage Act.  Under the new legislation, the definition of public works projects covered by the act is changed to projects constructed for public use, which would include ethanol plants.  The act is a long-standing labor law that protects tax dollars by ensuring that public works projects are constructed using properly trained workers and protects the workers by marking sure they are adequately compensated for their labor.

House Bill 46 was sponsored by state Rep. Dan Reitz, D-Steeleville, and state Sen., John Sullivan, D-Rushville, Senate Bill 46 was sponsored by Rep. Reitz and state Sen. Larry Walsh, D-Elwood and Senate Bill 1212 was sponsored by Sen. Walsh and state Rep. Mary Kay O'Brien, D-Watseka.

"I'd like to thank the bills' sponsors for their commitment to the future of ethanol in Illinois and the benefits it brings us," Blagojevich said.  "Sen. Sullivan, Sen. Walsh, Rep. Reitz, Rep. O'Brien and many other legislators deserve to share in the credit for what we've accomplishing today."