Freeborn County may lose a $479,196 endowment in 2002 from the state known as Homestead and Agricultural Credit Aid (HACA), according to an estimate by the Association of Minnesota Counties.

Wednesday, January 16, 2002

Freeborn County may lose a $479,196 endowment in 2002 from the state known as Homestead and Agricultural Credit Aid (HACA), according to an estimate by the Association of Minnesota Counties.

Gov. Jesse Ventura’s budget-balancing proposal would apply a universal cut of 1.5 percent and an additional cut for the counties with HACA increases greater than 4.5 percent from last year.

The reduction is only about 1.7 percent of the county’s $29 million annual budget. Ventura suggested that local governments make up the difference by using reserve funds.

Commissioner Dave Mullenbach expressed his concern about using the reserve. The county’s undesignated reserve is only about $2 million. A reduced reserve amount could affect the rating for the bonds the county issues.

&uot;The governor seems to care so much about maintaining the AAA rating for the state bonds. We also care about ours,&uot; Mullenbach said.

The county might issue more than $10 million in bonds this year if the commissioners decide to go forward with new courthouse construction. A lower bond rating could offset a current favorable market climate for bonds.

County Administrator Ron Gabrielsen has not yet thought of a particular cut in spending to make up for aid reductions. &uot;We are going to wait to see how the discussion in the state legislature goes,&uot; he said.

The governor’s proposal also includes a $3.5 million cut in a subsidy for the ethanol industry. The current subsidy of 20 cents a gallon up to a 15 million gallons per plant would be 18 cents in 2002.

The cut means a $300,000 reduction in revenue for EXOL.

General Manager Tony Simpson said, &uot;It is a shame for the state to pull out its investment form something that provides a lot of benefits for the community and the state itself.&uot;

Five-hundred cooperative member farmers in the region sell their corn to EXOL and share profits from the ethanol sales.

As a commodity dealt in the market, ethanol prices correlate to gas and oil. The industry’s profitability has been pressed by recent lower market prices, and Simpson worries the subsidy cut would further trim the dividends for members.

Due to the commitment by the state, the ethanol industry in Minnesota has grown rapidly in the past several years. The industry created an alternative market for corn growers in the Midwest and contributed to pushing up the corn price.

&uot;The subsidy is not just a handout but an investment, a good investment,&uot; Simpson said.